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Question : 21) To evaluate the performance of an investment center, a

21) To evaluate the performance of an investment center, a business needs KPIs that measure:

A) manufacturing productivity and product defect rate.

B) operating income and the efficient use of assets.

C) customer satisfaction and market share.

D) generation of  sales revenues and control of operating expenses.

22) Investment centers need KPIs to evaluate how efficiently the business unit uses assets.  Typical KPIs of this type would include all of the following EXCEPT:

A) ROI (Return on investment).

B) EVA (Economic value added).

C) NOI (Net operating income).

D) RI (Residual Income).

23) Which of the following KPIs are used to evaluate how efficiently a business unit uses assets?

A) Sales revenue growth

B) Percentage of market share

C) Residual income

D) Production efficiency

24) Which of the following KPIs are used to evaluate how efficiently a business unit uses assets?

A) Return on investment

B) Defect rate

C) Employee satisfaction

D) Production efficiency

25) Which of the following KPIs are used to evaluate how efficiently a business unit uses assets?

A) Hours of employee training

B) Defect rate

C) New product development time

D) Economic value added

26) The formula for ROI (return on investment) is:

A) operating income divided by average total assets.

B) operating income minus minimum acceptable operating income.

C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities.

D) operating income divided by sales revenue.

27) The formula for EVA (economic value added) is:

A) operating income divided by average total assets.

B) operating income minus minimum acceptable operating income.

C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities.

D) operating income divided by sales revenue.

28) The formula for RI (residual income) is:

A) operating income divided by average total assets.

B) operating income minus minimum acceptable operating income.

C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities.

D) operating income divided by sales revenue.

29) Parkinson Company provides the following financial data:

Income from operations

$200,000

Interest expense

$45,000

Gains/(losses) on sale of equipment

($2,500)

Net income

$152,500

Total assets at Jan 1

$2,600,000

Total assets at Dec 31

$3,200,000

How much is the return on investment?

A) 6.3%

B) 5.3%

C) 6.9%

D) 7.2%

30) Bardot Company reported operating income of $16,400.  Assets at the beginning of the year totaled $440,000.  Assets at the end of the year totaled $450,000.  How much is the ROI?

A) 4.2%

B) 3.9%

C) 2.7%

D) 3.7%

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