divisional performance

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June 28, 2017 at 7:19 am #394242
adarsh1997
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Hi John!
From you lectures and notes, I do have understood the overall concept of ROI but still has some issues.
Could you explain, how the ROI will increase year by year if the investment centre keeps the same asset without a policy of regular replacement,that is, continue to depreciate it’s NCA?
June 28, 2017 at 8:13 am #394246
John Moffat
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Because as they depreciate the value of the asset (and therefore the total net assets) will reduce.
If the profit stays the same, but you are dividing by a lower amount, then the ROI will increase.
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