Which of the following is a disadvantage of both residual income and ROI?
A)They are both absolute measures of return.
B)They are both difficult to calculate.
C)They both do not discourage myopic behaviour.
D)They both result in a percentage.

Question

Quizplus · Accepted Answer

Both residual income and ROI do not discourage myopic behavior, which means that they may encourage managers to focus only on short-term gains rather than long-term strategies. This can lead to decision-making that is not in the best interest of the company's overall goals and sustainability.

Which of the Following Is a Disadvantage of Both Residual