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?
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divisional performance
9y ago#1Because 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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