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Performance measurement

This topic has 4 replies, 2 voices, and was last updated 1 year ago by John Moffat.

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July 30, 2021 at 3:41 am #629811
johnbriane
Member
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Sir
Are both return on investment and residual income based on accounting measures of profit and capital employed which may be subject to manipulation
Or is it only based on residual income ?
And this is a disadvantage isn’t it sir
July 30, 2021 at 10:10 am #629841
John Moffat
Keymaster
- Topics: 56
- Replies: 51582
They are both subject to manipulation and it is a problem with both measures.
July 30, 2021 at 1:23 pm #629859
johnbriane
Member
- Topics: 170
- Replies: 160
Ok sir
So it’s a disadvantage of both ri and Roi
Thank you sir
July 30, 2021 at 1:24 pm #629860
johnbriane
Member
- Topics: 170
- Replies: 160
But why Is it open to manipulation Sir
July 30, 2021 at 2:20 pm #629865
John Moffat
Keymaster
- Topics: 56
- Replies: 51582
Because profits can be manipulated by things like deciding what rate of depreciation to charge and what to accrue and prepay.
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