Weighted Average Return on Assets (WARA) Reconciliation

Definition

A reasonableness check performed in purchase price allocations to verify that the weighted average rate of return across all identified assets (tangible, intangible, and goodwill) is consistent with the overall weighted average cost of capital (WACC) used in the transaction. If WARA materially deviates from WACC, it indicates that the individual asset returns or relative values require adjustment. WARA reconciliation is considered best practice by valuation standard-setters and is commonly required by auditors.