An advantage of ROI as a measure of performance is that
A) it is sensitive to book value.
B) it provides an incentive to use existing assets efficiently.
C) the time span of concern is short range.
D) the business cycle strongly affects ROI performance often despite managerial performance.
E) it is very sensitive to depreciation policy.

Question

Quizplus · Accepted Answer

ROI provides an incentive for management to use existing assets efficiently in order to generate profits. This can lead to more effective use of resources and better overall performance. The other options are not advantages of using ROI as a measure of performance.

An Advantage of ROI as a Measure of Performance Is