The average accounting rate of return:
A) Is actually based more on ﬁnancial values than on accounting values.
B) Measures net income against the market value of a ﬁrm.
C) Is highly recommended by ﬁnancial professionals as one of the two best methodologies used in the analysis of independent projects.
D) Is the primary methodology used in analyzing independent projects.
E) Is similar to the return on assets ratio.

Question

Quizplus · Accepted Answer

The average accounting rate of return (AAR) is similar to the return on assets ratio as it measures the return generated from net income relative to the book value of assets.

The Average Accounting Rate of Return