We have 2 divisions with the following information: Profit before depreciation: B1=$800,000, B2=S1,000,000; Assets: B1 =$2,000,000, B2=S3,000,000; Capital employed: B1 = $1,700,000 and B2 =
$2,550,000. 20%
straight-line depreciation is used.
Calculate ROI for each division.
CIMA Forums
ROI question
the answer is: depreciation on the asset (0.2* 2million) = 400k
profit after tax = 400k
divide by capital employed.
b1= 23.5% , b2 = 15.7%
Thanks for your answer
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