Show the merits of using return on investment, Strategic Management

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Q. Show the Merits of using return on investment?

Merits of using return on investment (ROI)

- Relative (percentage) measure so performance can be compared 'relatively' for divisions or business units which are different sizes.

- ROCE is a well understood measure for 'users' of financial accounting.

- Forces a manager to be efficient and effective with resources e.g. money or capital employed to buy assets, when attempting to improve profitability.

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