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Average accounting return |
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Definition of Average accounting returnAverage accounting returnThe average project earnings after taxes and depreciation divided by the average
Related Terms:CARs (cumulative abnormal returns)a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock. Abnormal returnsPart of the return that is not due to systematic influences (market wide influences). In Accounting exposureThe change in the value of a firm's foreign currency denominated accounts due to a Accounting earningsEarnings of a firm as reported on its income statement. Accounting insolvencyTotal liabilities exceed total assets. A firm with a negative net worth is insolvent on Accounting liquidityThe ease and quickness with which assets can be converted to cash. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Annualized holding period returnThe annual rate of return that when compounded t times, would have Arithmetic average (mean) rate of returnArithmetic mean return. Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns AverageAn arithmetic mean of selected stocks intended to represent the behavior of the market or some Average age of accounts receivableThe weighted-average age of all of the firm's outstanding invoices. Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Average (across-day) measuresAn estimation of price that uses the average or representative price of a Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Average tax rateTaxes as a fraction of income; total taxes divided by total taxable income. Cumulative abnormal return (CAR)Sum of the differences between the expected return on a stock and the Dollar returnThe return realized on a portfolio for any evaluation period, including (1) the change in market Dollar-weighted rate of returnAlso called the internal rate of return, the interest rate that will make the Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Ex post returnRelated: Holding period return Exante returnThe expected return of a portfolio based on the expected returns of its component assets and Excess return on the market portfolioThe difference between the return on the market portfolio and the Excess returnsAlso called abnormal returns, returns in excess of those required by some asset pricing model. Expected future returnThe return that is expected to be earned on an asset in the future. Also called the Expected returnThe return expected on a risky asset based on a probability distribution for the possible rates Expected return on investmentThe return one can expect to earn on an investment. See: capital asset Expected return-beta relationshipImplication of the CAPM that security risk premiums will be Generally Accepted Accounting Principals (GAAP)A technical accounting term that encompasses the Geometric mean returnAlso called the time weighted rate of return, a measure of the compounded rate of Holding period returnThe rate of return over a given period. Horizon returnTotal return over a given horizon. Incremental internal rate of returnIRR on the incremental investment from choosing a large project Internal rate of returnDollar-weighted rate of return. Discount rate at which net present value (NPV) Leveraged required returnThe required return on an investment when the investment is financed partially by debt. Market returnThe return on the market portfolio. Money rate of returnAnnual money return as a percentage of asset value. Moving averageUsed in charts and technical analysis, the average of security or commodity prices Multiple rates of returnMore than one rate of return from the same project that make the net present value Portfolio internal rate of returnThe rate of return computed by first determining the cash flows for all the Purchase accountingMethod of accounting for a merger in which the acquirer is treated as having purchased Rate of return ratiosRatios that are designed to measure the profitability of the firm in relation to various Realized returnThe return that is actually earned over a given time period. Regulatory accounting proceduresaccounting principals required by the FHLB that allow S&Ls to elect Required returnThe minimum expected return you would require to be willing to purchase the asset, that is, ReturnThe change in the value of a portfolio over an evaluation period, including any distributions made Return on assets (ROA)Indicator of profitability. Determined by dividing net income for the past 12 months Return on equity (ROE)Indicator of profitability. Determined by dividing net income for the past 12 Return on investment (ROI)Generally, book income as a proportion of net book value. Return on total assetsThe ratio of earnings available to common stockholders to total assets. Return-to-maturity expectationsA variant of pure expectations theory which suggests that the return that an Riskless rate of returnThe rate earned on a riskless asset. Safety-net returnThe minimum available return that will trigger an immunization strategy in a contingent Simple moving averageThe mean, calculated at any time over a past period of fixed length. Statement of Financial Accounting Standards No. 8This is a currency translation standard previously in Statement of Financial Accounting Standards No. 52This is the currency translation standard currently Subperiod returnThe return of a portfolio over a shorter period of time than the evaluation period. T-period holding-period returnThe percentage return over the T-year period an investment lasts. Time-weighted rate of returnRelated: Geometric mean return. Total dollar returnThe dollar return on a nondollar investment, which includes the sum of any Total returnIn performance measurement, the actual rate of return realized over some evaluation period. In Unleveraged required returnThe required return on an investment when the investment is financed entirely Weighted average cost of capitalExpected return on a portfolio of all the firm's securities. Used as a hurdle Weighted average couponThe weighted average of the gross interest rate of the mortgages underlying the Weighted average lifeSee:average life. Weighted average maturityThe WAM of a MBS is the weighted average of the remaining terms to maturity Weighted average remaining maturityThe average remaining term of the mortgages underlying a MBS. Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. RATE OF RETURN ON STOCKHOLDERSâ€™ EQUITYThe percentage return or profit that management made on each dollar stockholders invested in a company. Hereâ€™s how you figure it: RATE OF RETURN ON TOTAL ASSETSThe percentage return or profit that management made on each dollar of assets. The formula is: RETURN ON INVESTMENT (ROI)In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole. WEIGHTED AVERAGEAn inventory valuation method that calculates a weighted average cost per unit for all the goods available for sale. AccountingA collection of systems and processes used to record, report and interpret business transactions. Accounting equationThe representation of the double-entry system of accounting such that assets are equal to liabilities plus capital. Accounting periodThe period of time for which financial statements are produced â€“ see also financial year. Accounting rate of return (ARR)A method of investment appraisal that measures Accounting systemA set of accounts that summarize the transactions of a business that have been recorded on source documents. Accruals accountingA method of accounting in which profit is calculated as the difference between income when it is earned and expenses when they are incurred. Cash accountingA method of accounting in which profit is calculated as the difference between income Financial accountingThe production of financial statements, primarily for those interested parties who are external to the business. Internal rate of return (IRR)A discounted cash flow technique used for investment appraisal that calculates the effective cost of capital that produces a net present value of zero from a series of future cash flows and an Management accountingThe production of financial and non-financial information used in planning for the future; making decisions about products, services, prices and what costs to incur; and ensuring that plans are implemented and achieved. Return on capital employed (ROCE)The operating profit before interest and tax as a percentage of the total shareholdersâ€™ funds plus Return on investment (ROI)The net profit after tax as a percentage of the shareholdersâ€™ investment in the business. Strategic management accountingThe provision and analysis of management accounting data about a business and its competitors, which is of use in the development and monitoring of strategy (Simmonds). Target rate of return pricingA method of pricing that estimates the desired return on investment to be achieved from the Weighted average cost of capitalSee cost of capital. Accounting equationThe formula Assets = Liabilities + Equity. Purchase returnsA contra account that reduces purchases by the amount of items purchased that were subsequently returned. Sales returnsA contra account that offsets revenue. It represents the amount of sales made that were later returned. Weighted averageA method of accounting for inventory. accountingA broad, all-inclusive term that refers to the methods and procedures accounting equationAn equation that reflects the two-sided nature of a accrual-basis accountingWell, frankly, accrual is not a good descriptive double-entry accountingSee accrual-basis accounting. generally accepted accounting principles (GAAP)This important term
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