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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Divisional Performance Measurement
Hello tutor when you are given both gross profit and net profit which one of them should I use to calculate ROI? and please provide an explanation as to why it is so. Thanks
You should use the net profit.
There would be no logic at all in only looking at the gross profit – we calculate ROI to see how well the division is performing and the net profit measures the overall profitability, not the gross profit.
Thanks a lot tutor for clearing my doubts
You are welcome 🙂