So Am I right to think that when the question says access the performance of the division managers is when we use the controllable profit formula? If not when do we use the Net asset/capital employed? Will this be to access the business as a whole? Just a bit confused as to when to use the controllable profit and when to use the Net profit/cap employed. Clarifying this will be helpful. Thanks again .
Yes, when they say 'assess performance of the managers,' use controllable profit. Hint, anytime you see "head office recharge" or "depreciation charged to head office assets" you know they want you to exclude them from profit.
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Just want to say thank you for your great videos. You make what can seem an overwhelming question, seem so simple and achievable!
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glad to hear! good luck!
Thank you Steve for these wonderful debrief videos. I feel more confident now to take that exam 💪 I hope for a handy dandy pass !
Best of luck!
So Am I right to think that when the question says access the performance of the division managers is when we use the controllable profit formula? If not when do we use the Net asset/capital employed? Will this be to access the business as a whole? Just a bit confused as to when to use the controllable profit and when to use the Net profit/cap employed. Clarifying this will be helpful. Thanks again
.
Yes, when they say 'assess performance of the managers,' use controllable profit. Hint, anytime you see "head office recharge" or "depreciation charged to head office assets" you know they want you to exclude them from profit.
Hey steve , if fixed costs were given , then do we include that in our answer for division ROI?
If they are, "uncontrollable" then exclude. Otherwise include, as ROI is based on operating profit, and fixed costs are part of that.
hi sir shouldnt be fx gain loss included becuase it is a local decision
could you please explain the adjustments clearly