Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations? It eliminates the age of equipment as a factor in ROI computations. It is consistent with the computation of net operating income, which includes depreciation as an operating expense. It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI. It is consistent with the balance sheet

Operating assets are the assets of the entity which are acquired for or used in the operations of…

Answered: Which of the following would be an…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 44MCQ: When a Dupont analysis reveals that a company has much higher than average asset turnover and much...

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Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?

		It eliminates the age of equipment as a factor in ROI computations.
		It is consistent with the computation of net operating income, which includes depreciation as an operating expense.
		It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI.
		It is consistent with the balance sheet

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