Uniox,Inc.intends to increase its profits by 50% in the next fiscal year.Which of the following is most likely to be a lag indicator in Uniox's performance report?
A) return on investment
B) number of repeat customers
C) rate of on-time deliveries
D) defect rate

Question

Quizplus · Accepted Answer

Return on investment is a lagging indicator, as it shows the company's profitability after the fact. It is calculated by dividing the net profit by the total assets, and it reflects the company's ability to generate earnings from its investments. Since Uniox's goal is to increase its profits in the next fiscal year, the return on investment will only be calculated after the fiscal year ends, making it a lag indicator.

B) Number of repeat customers, C) rate of on-time deliveries, and D) defect rate are all examples of leading indicators or real-time indicators. They reflect the company's current performance and can be used to anticipate future trends. However, they are not directly related to the company's profitability, so they are less relevant to Uniox's goal of increasing profits.

Uniox,IncIntends to Increase Its Profits by 50% in the Next