Accounting Rate of Return

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  • Created by: mad0104
  • Created on: 28-05-15 18:36
What is the formula for ARR?
Total Net Profit/ No. of Years / Initial Cost X 100
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What does ARR look at?
The total accounting return for a project to see if it meets the target return
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Name one advantage of ARR
It provides a percentage return which can be compared with a target return
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Name another advantage of ARR
It looks at the whole profitability of the project
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Name one disadvantage of ARR
It doesn't take into account cash flows- only profits
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Name another disadvantage of ARR
Takes no account of the time value of money
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Card 2

Front

What does ARR look at?

Back

The total accounting return for a project to see if it meets the target return

Card 3

Front

Name one advantage of ARR

Back

Preview of the front of card 3

Card 4

Front

Name another advantage of ARR

Back

Preview of the front of card 4

Card 5

Front

Name one disadvantage of ARR

Back

Preview of the front of card 5
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