Average accounting return is defined as:
A) Average net income divided by average book value.
B) Average cash inflow divided by average cash outflow.
C) Average sales divided by average total assets.
D) Average net income divided by average project cost.
E) Average cash inflow divided by average book value.

Question

Quizplus · Accepted Answer

Average accounting return is calculated as the average net income divided by the average book value of the investment over its life. This method is used to evaluate the profitability of investments.

Average Accounting Return Is Defined As