A Problem with Using Residual Income Is That a Corporation

Multiple Choice

A problem with using residual income is that a corporation with a:

A) high investment turnover ratio always has a higher residual income than a corporation with a smaller investment turnover ratio
B) high return on sales always has a higher residual income than a corporation with a smaller return on sales
C) larger dollar amount of assets is likely to have a higher residual income than a corporation with a smaller dollar amount of assets
D) None of these answers is correct.