Which of the following incorporates the amount of investment into a performance measure?
A) dividend income
B) residual income
C) return on investment
D) both residual income and return on investment
E) both dividend income and residual

Question

Quizplus · Accepted Answer

Both residual income and return on investment incorporate the amount of investment into their performance measures. Residual income considers the net income after deducting a charge for the cost of capital, while return on investment measures the efficiency of an investment by comparing the return to the investment cost.

Which of the Following Incorporates the Amount of Investment into a Performance