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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
They are both subject to manipulation and it is a problem with both measures.
So it’s a disadvantage of both ri and Roi
Thank you sir
But why Is it open to manipulation Sir
Because profits can be manipulated by things like deciding what rate of depreciation to charge and what to accrue and prepay.