The myopia of a single-period measure such as return on investment is avoided by evaluating periodic profit through flexible budgeting and variance analysis coupled with a postaudit of major investment decisions.

Question

Quizplus · Accepted Answer

Flexible budgeting and variance analysis, along with postaudit of major investment decisions, allow for a more comprehensive evaluation of periodic profit beyond the short-term perspective of single-period measures like return on investment (ROI). This approach helps in understanding the performance over time and in different scenarios, thus avoiding the myopia associated with focusing solely on single-period metrics.

The Myopia of a Single-Period Measure Such as Return on Investment