Depreciation affects the accounting rate of return (ARR) by reducing the book value of an asset over time, which in turn lowers the asset’s annual return calculations. As depreciation expense increases, it reduces net income, potentially decreasing the ARR. This impact highlights the importance of considering depreciation when evaluating the profitability and performance of investments or assets.
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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.
