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ACCA F5 Divisional performance measurement – Return on Investment (ROI) vs Residual Income (RI)

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  1. Hi, there is an example in BPP study text for calculating ROI 1) Profit after depreciation as a % of net assets employed & 2) Profit after depreciation as a % of gross assets employed. Can you please let me know how to get the working capital figure??

    Thank you

    • Without seeing the question I cannot help you. I have the BPP Revision Kit but not the Study Text (the Study Text is not needed if you are watching my free lectures because they are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well 馃檪 )

      In future please ask this sort of question in the Ask the Tutor Forum, and not as a comment on a lecture.

  2. Greetings sire!
    i dont understand the disadvantage of RI that is the RI can not be use to compare the two divisions one of small and of large size,i cant pick that because RI calculated in case of small size divisions is of profit of that dicision investment in that division same for the large size one then how can not they be compared,
    thanks

    • If one division has twice the investment of another division then you would expect it to have twice the residual income.
      If the residual income was bigger by just $1 it would not mean it was being run better – quite the reverse.

  3. Sir, sorry if I am posting this in the wrong place, but the second lecture (of 24 minutes) on Ri and Roi, seems to be missing. Instead I am just seeing the third (5 minute) lecture twice.
    Thank you.

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