Accounting-Based Profitability Measures, usually the abbreviation ABPM is used. It is calculated as the ratio of the estimated profits and the average net book value of the investment.
Calculation:
ABPM = Estimated profit / Average net book value of investment
The best investment is the one with the highest percentage value.
Use of ABPM in practice: In an enterprise it used by the CFO in assessing the effectiveness of the investment. The criterion should be used as a supplement only.
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