The return on investment measure of performance: Multiple Choice О is calculated by dividing average total assets for a period by the amount of net income for the period. О is calculated using net income as the amount of return. О relates dividends paid to the company's average total assets. О is never as important a measure of management effectiveness as the amount of net income.

The return on investment measure of performance: Multiple Choice О is calculated by dividing average total assets for a period by the amount of net income for the period. О is calculated using net income as the amount of return. О relates dividends paid to the company's average total assets. О is never as important a measure of management effectiveness as the amount of net income.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 6Q: Explain the difference between NOPAT and net income. Which is a better measure of the performance of...

See similar textbooks

Similar questions

Return on Investment and Residual Income are Performance Measurements that both provide managers financial/accounting information in terms of percentages. TRUE FALSE
Return on net operating assets ( RNOA = NOPAT/Average NOA) is commonly used to evaluate a companies financial performance. If managers cannot increase NOPAT, they can still increase RNOA by reducing the amount of net operating assets (NOA). Listed below are four operating items that can be effectively managed to reduce operating assets, and/or increase RNOA: Inventories Accounts Receivable Plant, Property, and Equipment (fixed assets) Accounts Payable List and explain ONE action you would take, for EACH operating item above, to increase RNOA and/or reduce net operating assets (NOA). In your response, you should have ONE action item for EACH operating item listed.
In evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budget
A company that is seeking to increase return on investment should attempt to decrease: 1. sales 2.productive turnover 3.productiv assets 4. non productive assets
Which of the following statements is true? Return on investment (ROI) equals margin multiplied by sales. When used in return on investment (ROI) calculations, turnover equals sales divided by average operating assets. An advantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.
A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost center
What is the major shortcoming of using operating income as a performance measure for investment centers?
Which of the following measures the profitability of a division relative to the size of its investment in capital assets? A. residual Income (RI) B. sales margin C. return on investment (ROI) D. economic value added (EVA)
Which of the following is not a measure that management can use in evaluating and controlling investment center performance? a.residual income b.negotiated price c.income from operations d.rate of return on investment
Is it true that A high return on assets (Ropa) is an indication that a firm has a high level/value of assets compared to a low profit margin?
The following statements are true regarding the financial perspective EXCEPT:a. Financial performance can be improved through two basic approaches – revenuegrowth and productivity.b. Financial objectives typically relate to productivity.c. A financial measure might be net income.d. A financial objective might be to offer low process to satisfy and retain price-sensitivecustomers.
Which method might you prefer if you were a manager and your bonus was tied to a financial performance measure such as net income?(FIFO, LIFO, OR WEIGHTED AVERAGE)