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ROI question

Forums › CIMA Forums › ROI question

  • This topic has 1 reply, 1 voice, and was last updated 4 months ago by radkheta.
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  • February 8, 2022 at 7:22 pm #648328
    radkheta
    • Topics: 3
    • Replies: 2
    • ☆

    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.

    February 20, 2022 at 12:58 pm #648975
    radkheta
    • Topics: 3
    • Replies: 2
    • ☆

    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%

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