Enter the total profit registered, years of investment, initial investment, working capital, and scrap value into the calculator. The calculator will determine the accounting rate of return.

## Accounting Rate of Return Formula

The following formula is used to calculate the accounting rate of return of an asset or business.

ARR = (RP / YOI) / [(IV + WC + SV)/2] *100

- Where ARR is the accounting rate of return (%)
- RP is the registered profit
- YOI is the years of investment
- IV is the initial investment
- WC is the working capital
- SV is the scrap value

## What is an accounting rate of return?

An accounting rate of return is a measure of how profitable any given investment is. It’s more in depth than a typical ROI formula, as it takes into account working capital and scrap value. The higher the ARR the better the investment in 99% of cases.

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