Economic and Accounting Rates of Return
- Topics:
- Financial Statements
- Tags:
- Accounting,
- Finance,
- Financial,
- Financial Accounting,
- Financial Services,
- Operational Accounting,
- University Of Groningen
- Source:
- University of Groningen
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Overview: The rate of return on invested capital is a central concept in financial analysis. Financial statement users make regular use of the accounting rate of return (ARR) rather than the economic rate of return (IRR) to assess the performance of corporations and public-sector enterprises, to evaluate capital investment projects, and to price financial claims such as shares. This paper aims to provide a summary of the economic and accounting rates of return discussions in the literature. It analyzes the concepts of ARR and IRR and explores possible relationships between them. It extends the previous studies in this line to provide more specific relations of IRR and ARR.
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Format: PDF | Size: 143KB | Date: Oct 2000 | Pages: 38
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