Biology Forums - Study Force

A disadvantage of evaluating managers' performance based on ROI is that it can lead to undesirable managerial actions. Residual income can overcome many of the problems of ROI.

Required:

a.	Define residual income and explain how it is calculated.

b.	What are the shortcomings of residual income? Give an example of when ROI is

a better measure than residual income.

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