What is an advantage of residual inconse? A. A firm can Use it to build up its Supply of Cash for future investments B. Afirm can use it to forecast operating incom C. It oniy requires ore rate of returns acre'ss all business units. D. A firm can adjust the required rates of return for differences in rise.
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Which of the following statements is TRUE regarding residual income? A. Some investment opportunities that should be accepted from the viewpoint of the entire company could be rejected by a manager if the manager is evaluated on the basis of residual income. B. Residual income can be used to compare the performance of divisions of different sizes. C. Residual income is a better performance measure than return on investment. D. Residual income motivates managers to pursue investments where the ROI associated with those investments exceeds the company's minimum required return but is less than the ROI currently earned by the managers.
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A major drawback of residual income is that it
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