Which of the following is NOT true for Return of Investment technique?
Answer & explanation
Correct answer: option 3
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.
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.