One of the advantages of using net book value to measure invested capital is that:
A) it maintains consistency with the balance sheet prepared for external reporting purposes.
B) it allows comparison of return on investment with different companies.
C) the return on investment will increase steadily over time.
D) it maintains consistency with the balance sheet prepared for external reporting purposes AND it allows comparison of return on investment with different companies.

Question

Quizplus · Accepted Answer

Using net book value to measure invested capital maintains consistency with the balance sheet prepared for external reporting purposes. This is important for ensuring accurate and transparent financial information for shareholders, investors, and other stakeholders. However, net book value may not allow for easy comparison of return on investment with different companies, as it reflects historical cost rather than market value.

One of the Advantages of Using Net Book Value to Measure