ROI and RI

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March 10, 2017 at 5:00 pm #377593
azaramirov
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Hi. If two companies are in the same market but one is older ,the other was created newly (their assets’ book value will differ) the question:
Will the older company have better ROI and RI figures? I mean will being older make more favorable figures? I think for ROI it will, because of the lower value of capital employed. What about RI? Better for older again? (because of interest will be lower because of the asset value again)
Thanks
March 10, 2017 at 10:28 pm #377702
John Moffat
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You are correct for both – the older one will have higher ROI and higher RI (for the reason you state).
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