ROI-net replacement cost Vs. Net book value

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July 7, 2020 at 3:55 am #576178
Holmes1308
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Sir an ROI with capital employed figure calculated based on net replacement cost will give a lower ROI as compared to an ROI calculated based on net book value, right sir?
July 7, 2020 at 9:14 am #576210
John Moffat
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Yes – assuming that the replacement cost is higher than the net book value, which is obviously likely.

However ROI is usually calculated using the figures in the financial statements which will be the book values.
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