Page 10 - PowerPoint Presentation
P. 10

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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