An evaluation of the performance of an investment centre is based on:
A) the economic return relative to the resources invested.
B) the gross profit of an investment.
C) a medium-term performance indicator.
D) the manager's manipulation of the financial performance of the investment.

Question

Quizplus · Accepted Answer

Evaluating the performance of an investment center should be based on its economic return relative to the resources invested. This takes into account the profitability of the investment in relation to the costs incurred in generating that return. It provides a better measure of the center's profitability than simply looking at gross profit or a medium-term performance indicator. Additionally, it is important to ensure that the manager has not manipulated the financial performance of the investment to create a misleading picture of its performance.

An Evaluation of the Performance of an Investment Centre Is