accounting rate of return (ARR)
Definition 1
Straight-line' method of estimating average returns from an investment, it uses accrual based financial statements instead of compounded or discounted cash flows. Also called book value method, financial statement method, or simple rate of return.
Definition 2
Ratio that expresses the earnings before interest and taxes (EBIT) as a percentage of the capital employed at the end of an accounting period.
Popular 'Accounting & Auditing' Terms
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