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Management compensation plans typically specify performance criteria in terms of financial statement ratios. For instance, a plan might specify that

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Management compensation plans typically specify performance criteria in terms of financial statement ratios. For instance, a plan might specify that management must achieve a certain level of return on investment—for example, ROA. If managers were trying to maximize their compensation, how could they manipulate the ROA ratio to achieve this goal?

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Perhaps the easiest way to influence the ratio is to try t…View the full answer


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Financial Accounting A User Perspective

Financial Accounting A User Perspective

ISBN: 978-0470676608

6th Canadian Edition

Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry

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Question Posted: December 23, 2015 08:39:38
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