Return on Investment: The Relation of Book-Yield to True Yield

Abstract

The paper analyses the relationship between the book-yield on investment (measured as the conventional ratio of net book-income to net book-value of assets) and the true yield on investment. It examines the effect on this relationship of variations in capitalization policy, depreciation methods, revenue patterns and investment growth rates. It discusses the potential error in the conventional bookmeasure of rate of return for the oil and gas p:roducing industry and the implications of this error for managerial evaluation and F. P. C. regulation.

ARR vs. IRR: A REVIEW AND AN ANALYSIS

“…Hence, the issue addressed is whether the accountant's measure does correspond with what Harcourt (p.66) considers to be the 'right answer'. Likewise, the unquestioned assumption underlying Solomon's (1966) analysis is that ' . .…”

Accounting and Economic Rates of Return: A Note On Depreciation and Other Accruals

“…The debate concerning the accountant's measure of the rate of profit (i.e., the accounting rate of return) as a proxy for the economist's rate of profit (i.e., the internal rate of return) began with the seminal papers of Harcourt (1965) and Solomon (1966). Other papers featuring in the debate are those of Livingstone and Salamon (1970), Stauffer (1971), Gordon (1974), and Fisher and McGowan (1983).…”

Cash Management Behavior and Failure Prediction

“…Ruuhela (1972 and1975) to project future financial statements (see also Salmi, 1982). The model is based on a constant growth and profitability assumption having much in common with the classic work of Solomon (1966). Suvas used the projected leverage for the sample firms as a classification criterion.…”