CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is accounting rate of return (ARR)?

Accounting rate of return

The accounting rate of return (ARR) is the return an individual can expect to receive based on an investment made. ARR is also known as the simple rate of return and is useful for the speedy calculation of a company’s financial success or failures.

Where have you heard about accounting rate of return (ARR)?

ARR is an extremely useful system, and when employed with other frameworks it can lead to a very accurate financial analysis. It’s likely that many experienced traders and businesses will have used ARR at some point.

What you need to know about accounting rate of return (ARR).

ARR is calculated by dividing the annual accounting profit by the original investment of the project. It is a necessity for any investor wanting to examine the value of their investment quickly and simply. However, ARR is not beneficial when used comparatively as it does not take into consideration many factors that may impact an investment over time. It also does not take into account cash flow or Time Value of Money.

Find out more about accounting rate of return (ARR).

When calculating the accounting rate of return it is helpful to understand profit and loss.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading