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Reasons for using Return on Investment (ROI) and Residual Income (RI) – ACCA PM Lecture

VIVA

Reader Interactions

Comments

  1. hermela says

    April 13, 2022 at 9:00 am

    hello sir , thank you for your informative lecture.
    on ur lecture you said that roi is better in comparing larger size. what about RI ? isnt it also better when we compare large size?

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    • John Moffat says

      April 13, 2022 at 2:19 pm

      If one division is much larger than another then it is going to have a bigger RI. That doesn’t mean that the larger division is operating better – it might have a smaller ROI.

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  2. Azka. says

    August 4, 2020 at 8:51 pm

    Hi
    Sir can you explain the 3rd point of ROI. What does loss of goal congruence means?

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    • Azka. says

      August 14, 2020 at 10:53 pm

      ?

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      • John Moffat says

        August 15, 2020 at 8:07 am

        It is better to ask this kind of question in the Ask the Tutor Forum – I do not see all comments on lectures.

        Goal congruence is when managers of divisions are motivated to make decisions that are not only good for them but are also good for the company as a whole.

  3. Ahmad says

    February 28, 2020 at 11:56 pm

    hi,

    what about the disadvantages ?

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    • John Moffat says

      February 29, 2020 at 10:28 am

      Advantages of one are disadvantages of the other!!!!

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  4. Sun says

    August 25, 2019 at 6:19 pm

    Hi Sir,

    I still cannot understand the last point you mentioned about ROI. Why ROI usually ” doesn’t lead to loss of Goal Congruent”? Would you be able to give more details or an example to explain it?

    As I understand ROI sometimes doesn’t lead to goal congruent as it shows in Example 2. Therefore I think last point mentioned in ROI in the video be ” ROI usually doesn’t lead to Goal congruent”.

    Thanks in advance.

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    • Shivangi says

      February 9, 2020 at 5:17 pm

      He just said that situations like example 2 don’t happen very often in practice (usually it’s the case like example 1 where using ROI vs RI doesn’t make a difference).
      So it’s unusual/infrequent enough instance and that’s why ROI “usually” doesn’t lead to loss of goal congruence

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  5. addisanopacourage says

    August 29, 2018 at 11:36 pm

    Thanks again John well explained lecture

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    • John Moffat says

      August 30, 2018 at 10:17 am

      Thank you for your comment 馃檪

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