Page 192 - 5.2 i. Manac Costing ITC Summarised Notes

PERFORMANCE MEASUREMENT

Disadvantages of RI

• The size of the investment is ignored.

• The formula is more difficult to understand.

• Managers may be disgruntled about different

required rates of return.

• The answer is a rand-amount which makes it

difficult to compare different size divisions.

• The short-term view is emphasised.

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