The accounting rate of return (ARR)calculation uses accounting profits as opposed to cash flows

Name: The accounting rate of return (ARR)calculation uses accounting profits as opposed to cash flows
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The accounting rate of return (ARR) calculation uses accounting profits, which are the profits calculated using the accrual basis of accounting, rather than cash flows. ARR is calculated by dividing the average accounting profit by the initial investment.

The Accounting Rate of Return (ARR)calculation Uses Accounting Profits as Opposed