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Hi,
Wondered if someone could help (sorry i tried to ‘Ask Tutor a question’ but the page kept coming up with an error)I am stuck on this question about the ROI i am just confused as to why we add back the depreciation and the head office costs please could someone explain that would be greatly appreciated. 🙂
Thank you so much
Charlotte
The question says that the ROI is to be calculated using the controllable profit (as is usually the case).
Head office costs are not controllable by the division and are therefore added back. Also the question says that 30%. of the depreciation costs relate to assets controlled by head office (so not the division) and therefore these are added back as well.
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