Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Controlling

Question:
Which of the following is NOT true for Return of Investment technique?
Options:
According to this technique, RoI can be increased by increasing sales volume proportionately more than total investment
According to this technique, RoI can be increased by reducing total investment without having any reductions in sales volume
ROI does not permit departmental managers to find out the problem which affects RoI in an adverse manner.
All of the above
Correct Answer:
ROI does not permit departmental managers to find out the problem which affects RoI in an adverse manner.
Explanation:
It also permits departmental managers to find out the problem which affects RoI in an adverse manner.
According to this technique, ROI can be increased either by increasing sales volume proportionately more than total investment or by reducing total investment without having any reductions in sales volume. ROI provides top management an effective means of control for measuring and comparing performance of different departments. It also permits departmental managers to find out the problem which affects ROI in an adverse manner.