Why should a business avoid choosing an investment using ARR alone?
ARR cannot be calculated as a percentage
ARR measures customer satisfaction rather than profit and therefore avoids all calculation
Forecast profits may be uncertain and non-financial factors also matter
A higher ARR always means the investment costs more
37 exam-style questions on Edexcel GCSE Business 2.4 Making financial decisions, covering 2.4.1a Gross and net profit, 2.4.1b Margins and average rate of return, 2.4.2a Using quantitative business data, 2.4.2b Financial information: understanding performance, and 2.4.2c Financial information: making business decisions. Each one has a worked solution and a mark scheme showing where the marks go.