A target return profit objective implies that a company chooses
A)to set targets whose performance can be measured quickly such as by quarter or year.
B)to give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C)to set a profit goal that is often determined by its board of directors.
D)to reduce as many non-essential costs as possible and forego investing in any further market or product research.
E)base prices on a marginal return on investment.

Question

Quizplus · Accepted Answer

A target return profit objective is a specific profit goal that is established by a company's board of directors. This goal serves as a benchmark for the company's financial performance, and is typically based on a desired rate of return on investment. The goal cannot be set based on quick measurements (A) or a desire for higher market share (B). While reducing costs may be necessary to achieve the target return profit goal, it is not the sole focus (D). Pricing decisions may be influenced by the target return profit objective, but it is not the basis for setting prices on a marginal return on investment (E).

A Target Return Profit Objective Implies That a Company Chooses