The Accounting Rate of Return (ARR) is a financial ratio used to measure the expected profitability of an investment, defined as the ratio of average annual accounting profit to the initial investment cost.
Financial metrics used to measure a company's ability to generate profit relative to other key variables, such as sales, assets, or equity.
Ratio analysis is the use of accounting ratios to evaluate a company's operating performance and financial stability. Examples include return on capital employed and gross profit percentage for profitability assessment. Additionally, the liquid ratio examines solvency, while gearing ratios evaluate the company's financial structure.
Return on Equity (ROE) is a financial metric that assesses a company's ability to generate profit from its shareholders' equity. It is calculated by dividing net income by shareholders' equity.
