What question did this study set out to answer?

To explore how the accounting rate of return influences financial performance evaluation in companies.

The Role of the Accounting Rate of Return in Financial Statement Analysis.

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Analysis reveals the significance of accounting rate of return for evaluating financial performance, suggesting its utility in decision-making.

To explore how the accounting rate of return influences financial performance evaluation in companies.
Examined the relationship between accounting and economic rates of return
Derived an accounting-based formula for a firm's present value
Simplified the analysis using constant ARR and growth rates
Identified the uses and limitations of derived equations in financial assessments.
Established a significant relationship between accounting and economic rates of return
Demonstrated the practical application of ARR in financial performance evaluations
Outlined the limitations of using accounting return metrics in financial analysis.

Brief et al. (1992) studied this question.

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Analysis reveals the significance of accounting rate of return for evaluating financial performance, suggesting its utility in decision-making.