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Performance measurement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Performance measurement

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
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  • July 30, 2021 at 3:41 am #629811
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    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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