1. Companies use different metrics, such as return on investment (ROI) and economic value added (EVA), to measuring their financial performance. Consider the features of these metrics and respond to the following:
How does EVA compare to ROI and residual income in measuring the financial performance of a company? Is EVA superior to ROI? Explain.
2. The CPA for Hollister Corporation said to its president, “If a product line is generating a loss, then it should be discontinued.” What are your thoughts on the statement?
Keep the following point in mind:
The reasons for discontinuing a product line are accurately identified and supported with explanations.