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ROI

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › ROI

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
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  • July 7, 2020 at 3:28 am #576176
    Holmes1308
    Member
    • Topics: 34
    • Replies: 16
    • ☆☆

    “ROI=Controllable Profit/Capital Employed

    Controllable profit is usually taken after depreciation but before tax.”

    Sir in my study text the aforementioned statements are stated, and i have a doubt pertaining to it. Why is controllable profit after deprn? becuase deprn is a non-controllable cost. So technically profit figure should be EBITDA.

    July 7, 2020 at 9:12 am #576209
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54704
    • ☆☆☆☆☆

    It depends who controls the purchase of the non-current assets. If the division decides on the purchases then the depreciation is controllable. If it is the head office who decided on the purchase then the depreciation is not controllable by the division.

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