The Formula for Calculating the Accounting Rate of Return for a Capital

question 126

Multiple Choice

The formula for calculating the accounting rate of return for a capital asset is

• A)average annual operating income from asset/amount invested in asset.
• B)average annual net cash inflow from asset/amount invested in asset.
• C)(average annual operating income + depreciation expense)/amount invested in asset.
• D)(average annual cash inflows - depreciation expense)/(amount invested in asset + residual value of asset).

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Definitions:

Shadow Organisation

An informal network within an organization that operates based on personal interactions and relationships, rather than formal structures.

Management Strategy

A comprehensive plan to align company operations, resources, and actions with its goals, emphasizing efficiency and competitiveness.

Financial Manager

A professional responsible for managing an organization's financial health, including planning, investment, and risk management.

Horizontal Silos

Departments or units within an organization that operate in isolation from each other, leading to a lack of communication and cooperation across different areas.