Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies. Formula of ROI: Return on investment = Income from operations Invested assets Decentralized operations: In a company where the plans and operating decisions are delegated to the divisional managers, such a company is said to have decentralized operations. To describe: The use of ROI in comparing the profitability between the divisions of decentralized companies

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter 24, Problem 6DQ
To determine

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI:

Return on investment=Income from operationsInvested assets

Decentralized operations: In a company where the plans and operating decisions are delegated to the divisional managers, such a company is said to have decentralized operations.

To describe: The use of ROI in comparing the profitability between the divisions of decentralized companies

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