The average rate of return, also known as the average rate of return, refers to the ratio of the average annual net income of an investment project to the average investment amount of the project, that is, the average income after deducting income tax and depreciation during the whole project period divided by the average book investment amount. For stocks, the average yield is the total yield divided by the number of stocks.

Average rate of return is a capital budgeting method, which has both advantages and disadvantages, and is widely used in financial management and other activities within the company.

What are the advantages of average rate of return?

The advantage of the average rate of return is that the calculated data can be directly obtained from the accounting statements, and the whole calculation process is relatively simple, which makes the data processing more intuitive and convenient, and it is convenient to operate in practical application, and it is not too general and difficult to understand.