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Hi,
In most cases of the ROI questions in the exam they will give some adjustment to the net profit to make it controllable by the manager of the division and sometimes they give some vague point to adjust.
but regarding the the net assets what are the most adjustments that may come
like they want the ROI to be based on average net assetsbut what are the other things that may be required ?
i.e do we have to bring the net assets to its controllable estate.??like deducting the investment made by and controlled by the head office not the divisional manager!!
is that required?
Thanks.
In answer to your question
Average net assets are commonly used, but adjustments may be required to ensure that the net assets reflect only those that are controllable by the division manager.
You will have to look at the question carefully.
Part A and B questions it will be straight-forward to answer.
In a part C question, anything you are not clear on, then state your assumptions in writing.
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