Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

Question

Quizplus · Accepted Answer

Operating income or EBIT (Earnings Before Interest and Taxes) is a better performance measure for profit centers of multinational corporations because it excludes interest and taxes, which are beyond the control of the manager. This measure focuses on the operating activities of the division and allows for better evaluation of the manager's ability to generate revenue and control costs. Furthermore, it is a commonly accepted measure in the industry, making it a useful tool for benchmarking against competitors. However, it is not necessarily easier to calculate and should not be the only measure used for management control.

Which of the Following Statements Is a Reason for Using