• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Return on Investment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Return on Investment

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • November 29, 2021 at 1:17 pm #642003
    Natasha1996
    Member
    • Topics: 34
    • Replies: 22
    • ☆☆

    If the company accepts the new investment because ROI is higher than the target ROI then it will result in increase in profitability of the company. It is in the interest of the company to undertake the new investment.

    We only account for additional profit and additional investment when comparing the two ROIs from the company’s point of view.

    We compare the new investment with the targeted ROI to see whether the new investment is giving more return or more ROI

    If the manager accepts the new investment because ROI with new investment is higher than the ROI without new investment then it will result in increase in profitability of the division. It is in the interest of the division to undertake the new investment.

    The manager is rewarded if he is able to increase the current ROI by taking new investment.

    [We compare the two different investments made by the managers of the division to see which one is giving more benefit or more ROI)

    Goal Congruence is where the company and division both are having increase in profitability by accepting the new investment due to the goal congruent decisions made by the manager. However, if either the company accepts the new investment but the manager does not or the manager accepts the new investment but the company does not, it is regarded as not goal congruent decision.

    Is that all true?

    November 29, 2021 at 5:30 pm #642026
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    Yes, that is all true 🙂

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
  • abdallah254 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy