When evaluating managerial actions,which of the following alternate measures overcomes many of the problems with ROI?
A)Residual Income
B)EVA
C)Both Residual Income and EVA.
D)Neither Residual Income nor EVA.

Question

Quizplus · Accepted Answer

Both residual income and EVA (Economic Value Added) measures overcome the problems with ROI, such as not considering the cost of capital. Residual Income compares the net operating income to a minimum required return, while EVA calculates the return on investment after accounting for the cost of capital. Thus, both measures provide a more accurate evaluation of managerial actions.

When Evaluating Managerial Actions,which of the Following Alternate Measures Overcomes