Explain the differences and similarities between Return on Investment (ROI) and Residual Income (RI)

Q: What is the chief disadvantage of ROI as an investmentcenter performance measure? How does the…

A:

Q: RUE OR FALSE Net income under GAAP highlights differences between variable and fixed costs.

A: Answer:   Net income under GAAP highlights differences between variable and fixed costs.   The…

Q: Which one of the following statement is true about profit maximization? a It foc US or Ountina

A: 1. Profit maximization is the concept that focuses on maximising the profits. This concept ignores…

Q: xplain the impact of risk, uncertainty, and changing variables on cost-volume-profit analysis.

A: Cost-volume-profit analysis is one of the decision accounting analytical approaches that aid in…

Q: 1. When applying lower of cost or market, market value A. is defined as the selling price B.…

A: This Net realizable value(NRV) generally a common method used in valuation of an asset in inventory…

Q: A responsibility center structure that considers investments made by the operating segments by using…

A: Residual income means  income will receive after completion of the work also. Example : Rental…

Q: Create an example showing how residual income is calculated. What information is used in computing…

A: Return on investment (ROI):   Return on investment evaluates how efficiently the assets are used in…

Q: How does an “opportunity cost”,  subtracting from the revenue of an alternate course of action,…

A: Opportunity cost: Opportunity cost is a loss of income from one alternative if another alternative…

Q: Why is NOPAT a better performance measure than net income?

A: NOPAT stands for Net Operating Profit After Tax. It refers to the organization's earnings before tax…

Q: Which of the following is NOT true about the cause-and-effect criterion when estimating a cost…

A: The cause and effect analysis is one of the factors for making cost allocation decisions. The cost…

Q: Explain how did it get the NPV, the Economic Value Added (EVA), and the Market Value Added (MVA)

A: Capital budgeting is a process that is undertaken by an organization or business to evaluate…

Q: Identify and differentiate or define the types of

A: There are mainly two types of payback analysis : 1. Payback period 2. Discounted payback period

Q: Which of the following statements is most correct about step costs?  they have the same behaviour…

A: Marginal costing is the one by which the cost of additional unit production is calculated. Under…

Q: On what concept is the price-earnings multiple valuation approach based?

A: Price earning ratio is computed by dividing the market price of the share by the earnings per share.

Q: Why is profitability analysis necessary, with a particular emphasis on return on investment? When…

A: Profitability is a phrase that relates to the metric used to quantify earnings. Profitability…

Q: What does it mean when ROI has decreased even though net income hasincreased?

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: Explain different terms are used to refer to rate of return?

A: Answer: Rate of return is nothing but the returns that are expecting on investments made by…

Q: How does the application of the standard deviation differ from the application of the coefficient of…

A: a. Standard Deviation: The average fluctuation of a variable around the mean is known as standard…

Q: With example, explain the difference between induced and indirect economic impact.

A: Answer:- Economic impact definition:- An economic impact study investigates the effects of a certain…

Q: When making decisions, managers should consider a. revenues that differ between alternatives. b.…

A: The explanation for the given options:   a. A manager on the verge of making decisions must consider…

Q: 1. Prepare an income statement using the a. Net realizable value method b. Reversal cost method

A: Net realizable value refers to the value which is realized upon the sale of assets minus cost…

Q: Define “Market Value Added (MVA)” and “Economic Value Added(EVA).”

A: Introduction: Economic value added (EVA) and Market value added (MVA) are computations utilized to…

Q: Show and contrast how return on investment and residual income are used to evaluate the performance…

A: ROI  (return on investment =  ( Net Profit / Cost of the investment) X  100    Residual income =…

Q: “RI is not identical to ROI, although both measures incorporate income and investment into their…

A:

Q: 2. What is cost-volume-profit analysis and what are the important assumptions of this analysis?

A: Profit analysis entails dissecting a company's reported profit figure to determine the true extent…

Q: What ROI will equate the PV of Inflows and the PV of outflows? a. Internal rate of return (IRR) b.…

A: Option b is incorrect because cost of capital means the cost that is incurred by the organization on…

Q: In what sense is the WACC an average cost? A marginal cost?

A: Weighted average cost of capital is the firm's cost of capital which is based on proportion of each…

Q: Define the terms market value added (MVA) and economic value added (EVA).

A: The concept of economic value added was developed by Stern Stewart & co & is also known as…

Q: are return on investment, residual income, and EVA qualitative components?

A: Qualitative components refer to the intangible effect of the events and transactions of business…

Q: The target rate of return on investment the percentage used to markup the cost to an acceptable…

A: Target rate return on investment is required profit on investment made and markup the cost is…

Q: What is meant by the terms margin and turnover in ROI calculations?

A: ROI( Return on investment) is a performance measure used to measure the efficiency of an…

Q: How does the residual income approach overcome this problem?

A: Definition: ROI: It is a measure of the amount of return on a particular investment with respect to…

Q: Explain the benefits of a Residual Income structure within an investment center framework.

A: The benefits of residual income are as under :  1) It takes into account the opportunity cost of…

Q: ases? or only in t

A: The explanation is given below ,