Carlton division has been stagnant for the past five years,neither growing nor contracting in size and profitability.Investments in new property,plant and equipment have been minimal.Would the division's use of total assets (valued at net book value)when measuring return on investment result in (1)using numbers that are consistent with those in the balance sheet and (2)a rising return on investment over time?
Consistent with numbers on the balance sheet
Produce a rising return on investment over time

Question

Quizplus · Accepted Answer

Using total assets valued at net book value would be consistent with numbers on the balance sheet. Additionally, since the division has not been investing much in new assets, the division's return on investment may gradually rise over time.

Carlton Division Has Been Stagnant for the Past Five Years,neither