ACC309_U5_Review_BrittayPearson.docx

3 in what way can the use of a roi as a performance

This preview shows page 2 - 3 out of 3 pages.

3. In what way can the use of a ROI as a performance measure for investment centers lead to bad decisions? How does the Residual Income Approach overcome these problems? (25 points) The ROI allows for a manager of a n investment center to reject a profitable income if its rate of return exceeds the company’s required rate but is also lower than the rate of the investment centers current ROI. The RI approach overcomes this problem by increasing the residual income anytime a project exceeds the required rate of return. 4. Why does the Balanced Scorecard include financial performance measures, as well as measures of how internal business processes are doing? (25 points) The balanced scorecard is used to support a company’s strategy (actions that will further company goals). If the company had financial goals then measures of finical performance
Image of page 2

Subscribe to view the full document.

Pearson 3 must be included in the balanced scorecard. If internal business processes are improving, but financial outcomes aren’t then it shows that the company’s strategies aren’t working and they need to revise them in order to see the changes they want.
Image of page 3
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern