alleryStart learning →ARR is built on evaluation of which measure?
AAccounting profits
BCash receipts
CMarket valuation
DDiscount factors
Answer & Solution
Correct answer: A. Accounting profits
ARR uses accounting profit after depreciation rather than cash inflows.
Keep practising Accounting Rate of Return
Browse all Accounting Rate of Return questions for CA Inter, or explore more Financial Management topics.
Related questions
Which measures do economists prefer over payback for return?Rs 9,00,000 is invested and net cash flow is Rs 1,80,000 a year. Payback?A: profit Rs 40,000 on average investment Rs 2,00,000. B: Rs 54,000 on Rs 3,60,000. HigherCost Rs 12,00,000 and scrap Rs 2,00,000. Average investment under ARR?Cost Rs 3,00,000, scrap Rs 60,000, 4 years, total profit Rs 1,44,000. ARR?Which goal underlies capital budgeting in corporate finance?Capital budgeting mainly concerns which type of spending?Companies create value when their return on capital is above what?