When using financial performance measures,which of the following statements is incorrect?
A) Most companies use a weighted-average to determine the amount of average assets for ROI calculations.
B) Average total assets are used for both ROI and RI computations.
C) The limitations of financial performance measures reinforce the importance of the balanced scorecard.
D) In general, calculating ROI based on the net book value of assets gives managers an incentive to continue using old, outdated equipment because its low net book value results in a higher ROI.

Question

Quizplus · Accepted Answer

Most companies do not typically use a weighted-average to determine the amount of average assets for ROI calculations; they usually use a simple average or the value at the beginning or end of the period.

When Using Financial Performance Measures,which of the Following Statements Is