As return on investment is a short-term performance measure:
A)there is a need to combine it with long-term measures when assessing performance.
B)it cannot be manipulated by managers for their own benefit
C)it is useful for comparing divisions of different sizes
D)none of the options is true

Question

Quizplus · Accepted Answer

While return on investment (ROI) is a useful measure to assess short-term performance, it does not consider the long-term impact of investment decisions. Therefore, it is important to use other measures, such as net present value or economic value added, to complement ROI. Additionally, ROI can be manipulated by managers through creative accounting practices, so it is important to validate the accuracy of the data used to calculate it. Finally, comparing divisions of different sizes based on ROI can be misleading, as larger divisions may have access to greater resources and generate higher ROI as a result.

As Return on Investment Is a Short-Term Performance Measure