143. CSO: 1B3h LOS: 1B3m
To insure that a divisional vice president places appropriate focus on both the short-term
and the long-term objectives of the division, the best approach would be to evaluate the
vice president’s performance by using
a. return on investment (ROI) which permits easy and quick comparisons to other
similar divisions.
b. residual income since it will eliminate the rejection of capital investments that
have a return less than ROI but greater than the cost of capital.
c. division segment margin or profit margin.
d. financial and nonfinancial measures, including the evaluation of quality, customer
satisfaction, and market performance.
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