Market-based bonus schemes may be considered more appropriate from a PAT perspective in industries in which: successful strategies will not be reflected in accounting profits for a number of periods. the price/earnings ratio is commonly greater than 12. profits may be the subject of manipulation by managers. capital investment is not an important strategic decision.

There are activities whose usefulness or potential cannot be measured in terms of money and they…

Answered: which: successful strategies will…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Market-based bonus schemes may be considered more appropriate from a PAT perspective in industries in which:

		successful strategies will not be reflected in accounting profits for a number of periods.
		the price/earnings ratio is commonly greater than 12.
		profits may be the subject of manipulation by managers.
		capital investment is not an important strategic decision.

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