The average accounting rate of return is most similar to which one of the following ratios?
A) Profit margin.
B) Return on assets.
C) Return on equity.
D) Payout ratio.
E) Plowback ratio.

Question

Quizplus · Accepted Answer

The average accounting rate of return (AARR) is most similar to the return on assets (ROA) because both ratios measure the profitability of a company relative to its total assets. AARR calculates the return generated from the net income of the proposed capital investment, while ROA focuses on the overall profitability relative to the company's total assets.

The Average Accounting Rate of Return Is Most Similar to Which