The Accounting Rate of Return (ARR) offers the advantage of simplicity and ease of calculation, using straightforward accounting figures to assess investment profitability. However, its disadvantages include a reliance on historical data and ignoring time value of money, which can lead to less accurate investment evaluations compared to more comprehensive methods. Additionally, ARR does not account for cash flow timing, potentially skewing investment decisions.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Autonomous O2C to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
