ACC 201 WORKSHOP FIVE DROPBOX 5.4 Performance Evaluation Handout
Indiana Wesleyan University
1. Why might a division manager be reluctant to invest in new equipment that would improve productivity?
2. If a new investment in equipment produces a return that exceeds the target rate of return, what will happen to the residual income of the division?
3. What is a third method of evaluating financial performance besides ROI and EVA?
4. Are these measures of financial performance short-term or long-term in their perspective? Explain.
5. How is ROI defined?
6. What major drawback does using ROI as a key performance indicator have?
7. How is residual income defined?
8. How is economic value added defined?
9. What is the time perspective of the three performance indicators described in this video?