What is the advantage of the accounting rate of return method?

The accounting rate of return (ARR) method provides a straightforward way to assess the profitability of an investment by measuring the expected annual accounting profit as a percentage of the initial investment cost. One key advantage of ARR is its simplicity, making it easy for stakeholders to understand and apply in decision-making. Additionally, it utilizes readily available accounting data, allowing for quick evaluations without complex calculations or cash flow projections. However, it does not consider the time value of money, which is a limitation to keep in mind.