The power of the residual operating income (ROPI) model is that it allows managers to focus on either the income statement or balance sheet to increase firm value.

Question

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The ROPI model emphasizes the importance of both the income statement and balance sheet, as it considers residual income, which is the income generated after accounting for the cost of capital. This requires a comprehensive view of both financial statements to assess firm value accurately.

The Power of the Residual Operating Income (ROPI) Model Is