The Accounting Rate of Return Is Calculated As

question 129

Multiple Choice

The accounting rate of return is calculated as:

• A) The after-tax income divided by the total investment.
• B) The after-tax income divided by the annual average investment.
• C) The cash flows divided by the annual average investment.
• D) The cash flows divided by the total investment.
• E) The annual average investment divided by the after-tax income.

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Definitions:

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Aggressive Revenue Recognition

A practice where a company prematurely or improperly records revenue to make its financial performance appear better.

Receivables Management

Practices and procedures used to manage amounts owed to a business by its customers, enhancing cash flow.

Note Disclosures

Additional information provided in financial reports that complements and clarifies the main financial statements, often detailing accounting policies and methodologies.