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Finance Dictionary and Glossary of Investment Terms
Average accounting return
Definition 1.
The average project earnings after taxes and depreciation divided by the average book value of the investment during its life.
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Definition 2.
A measure of the return on an investment over a given period, equal to average projected earnings minus taxes, divided by average book value over the duration of the investment. This measure can also be calculated using average projected earnings without excluding taxes, or average projected earnings less taxes and depreciation. This ratio measures how well investment assets are being used to generate income.
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