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Average Accounting Return Rule
A capital budgeting criterion that measures the profitability of an investment as the average net income divided by the average book value.
Profitability Index Rule
A capital budgeting technique used to decide whether to invest in a project, calculated as the present value of future cash flows divided by the initial investment cost.
Capital Budgeting Technique
Methods used by companies to evaluate and select investments in long-term assets based on their potential to generate cash flows in the future.
Profitability Index
A financial metric used to evaluate the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment.
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