Which of the following financial performance measures can be used to compare potential projects of different sizes?
A) EVA
B) Residual income
C) ROI
D) Operating income

Question

Quizplus · Accepted Answer

ROI (return on investment) is a percentage measure that calculates the return earned on an investment relative to its cost. It is a commonly used financial performance measure to compare potential projects of different sizes because it takes into account the size of the investment. EVA (economic value added) and residual income are dollar-value measures, which are not directly comparable between projects of different sizes. Operating income is a dollar-value measure that reflects the profitability of a business, but does not take into account the size of the investment.

Which of the Following Financial Performance Measures Can Be Used