What Is an Average Annual Return?

Average rate of return (ARR), also known as 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. The average book investment. The average stock return is the total return divided by the number of shares.

Average yield

The average return of the fund is an annualized statistical value of the average monthly return of the fund and is used to calculate the standard deviation of the fund's return. The average rate of return is not exactly the same as the three-year annualized rate of return of the fund.

Average return rate = return amount / investment amount

Accounting rate of return = annual average net income / original investment amount * 100%

In financial management, average return = average annual net cash flow / investment

Among them, the average annual net cash flow = cumulative net cash flow / years of operating period

This is a co-existing capital budgeting method that is often used in corporate finance.

Advantages: data can be obtained from accounting statements; the calculation process is simple.

Disadvantages: The time value of funds is not taken into account.