Business Terms and Jargon Explained
What is Accounting Rate of ReturnThe accounting rate of return is an accounting ratio that allows comparison of different projects.
It is the average profits of a project over the initial capital investment presented as a percentage.
Average profits x 100
e.g Capital investment is 200K
Year 1 profit 12K
Year 2 profit 40K
Year 3 profit 20K
Total profit for project is 72K
Average profit is 24K
Accounting rate of return is 24 divided by 200 times 100 is 12%
This can now be compared with other projects.
<- Go Back
Business Terms Home page
Search Jargon and Terms Database
A B C D E F G H I J K L M N
O P Q R S T U V W X Y Z
Term created / updated 2005-11-09 12:34:44
Knowledge is the key to success. That is why we have gone to great lengths to get you these business terms and jargon, and explain them in Plain English. Its very easy to comprehend. Learn to understanding and know your business jargon. This will keep you informed among your peers. Bookmark Your business dictionary.
Copyright © 2004-2021 Scopulus Limited. All rights reserved.