Companies normally measure their profit performance using ROI; however,this approach suffers because profits are arbitrarily measured and subject to manipulation.

Question

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ROI (Return on Investment) is a financial ratio that measures the efficiency of an investment or compares the profitability of different investments. However, profits can be artificially inflated or deflated by various accounting techniques, such as depreciation, inventory valuation, and tax strategies. Therefore, ROI may not be an accurate indicator of a company's actual performance.

Companies Normally Measure Their Profit Performance Using ROI; However,this Approach