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Hello sir i am again here with stupid questions..
–>When calculating ROI of a division or investment centre only portion of controllable assets should be consider<–
But one of BPP question really confusing me
Q;The following statement have been made about the use of ROI in Alder Co1;If the manager performance is being evaluated,a portion of head office assets should be includedin the calculation of ROI in Alder investment centres.
2;If the performance of the investment centre is being appraised,head office assets,or investment centre assets controlled by head office should not be included in calculation of ROIStatement 1 is obviously wrong.
but statement 2 also look like true because its true that head office assets or those controlled by head office should not be includedANS; well in KIT ans statement 2 is also wrong by giving reason as ”because an investment centre could not operate WITHOUT the support of head office assets and administrative backup
This ans breaks my whole concept of invetment centre or division..plz explain it..i really thankful to you
The answer is correct.
If we are measuring the performance of the division then we need to look at all the assets of the division (and all the profits) regardless who is controlling them.
If we are measuring the performance of the manager, then it is only right to consider the assets (and the profits) that are controlled my the manager.
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