Paulreed: Created page with "ARR = Average annual profit / Average investment to earn profit X 100 Average Annual profit is Profit per year less the annual depreciation / divided by the number of years Av..."

2010-12-24T13:43:28Z

Created page with "ARR = Average annual profit / Average investment to earn profit X 100 Average Annual profit is Profit per year less the annual depreciation / divided by the number of years Av..."

New page

ARR = Average annual profit / Average investment to earn profit X 100

Average Annual profit is Profit per year less the annual depreciation / divided by the number of years

Average Investment = Cost of machine + Disposal value / 2

Dont forget to add working capital to the average annual investment [[HOW]]

ARR = ROCE except ARR is calculated before the investment. ROCE is calculated after

ARR ignore the time value of money
Looks at accounting profits and not cash
It doesnt look at sizes of investment
Its a percentage solution

See also [[Payback]] [[IRR]] [[NPV]]

[[Category:Strategy]]

ARR - Revision history

Paulreed: Created page with "ARR = Average annual profit / Average investment to earn profit X 100 Average Annual profit is Profit per year less the annual depreciation / divided by the number of years Av..."