Question

Managerial performance can be measured in many different ways including return on investment (ROI) and residual income. A good reason for using residual income instead of ROI is:

Answer 1

The main reason behind using the residual income in place of rate if income is that the manager always goes for that project that gives maximum benefit to the organization.

Step-by-step explanation:

The main reason behind using the residual income in place of rate if income is that the manager always goes for that project that gives maximum benefit to the organization.

As residual income is referred to income that calculated after deducting all debt and expenses occur on the project. ROI is a way to predict the profit of the project while residual income calculates the net income that the organisation generates from the project.