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roi and ri

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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October 11, 2021 at 8:10 am #637427
johnbriane
Member
- Topics: 170
- Replies: 160
sir i have two questions
1) does not facilitate easy comparison between divisions of different sizes is an disadvantage of both roi and ri correct ?
2) based on accounting measures of profit and capital employed which maybe subject to manipulation is also a disadvantage of roi and ri am i correct sir ?
thank you
October 11, 2021 at 9:09 am #637437
John Moffat
Keymaster
- Topics: 56
- Replies: 51585
1. No. It is a disadvantage of RI because a bigger division is going to have a bigger RI. It is not a disadvantage of ROI because that is calculated as a %.
2. Yes, that is true.
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