Average accounting return

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Average accounting return

The average project earnings after taxes and depreciation divided by the average book value of the investment during its life.

Average Accounting Return

A measure of returns over the life of an investment. It is calculated by taking the average net profit (earnings minus taxes and depreciation) and dividing it by the average book value of the investment over its life. The average accounting return is used to help determine how efficiently assets are used to produce a profit.