Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business-T > 3.3 > Flashcards

3.3 Flashcards

1
Q

Time series analysis

A

-a set of observations that are measured at specific time intervals
-attempt to identify those factors that exert on influence on the values in the series
-May be projected into the future and used for short-term and long-term forecasting

A sequence of data points that occur in a successive order over some period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Why might you use time series analysis

A

-basic tool for forecasting activity levels and decision making
-may reveal patterns
-help promote an understanding of past and current changes
-long term underlying growth movement (Trends)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is it used for

A

-sales figures for individual businesses/industries
-gross nation product
-the value of one currency related in another
-unemployment rate
-economic growth
-foreign debt
-trade figures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

4 components of times series

A

-trend
-cyclical
-seasonal
-irregular

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Trend

A

-Is the long term underlying movement of sales -the cycle or long term variations about the trend caused by booms and slumps
-seasonal factors e.g. weather
-erractic factors/unplanned events
-persistent, overall up or down pattern
-due to pop or technology
-several years duration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Cyclical

A

-repeating up and down movement
-due to interactions of factors influencing economy
- long term variations (2-10 years of data)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

seasonal

A

-regular patterns of up and down fluctuations
-due to weather, customs
-occurs within 1 year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

irregular

A

-erratic unsystematic, ‘residual’ fluctuation
-due to random variation or unforeseen events
-union strike
-freak weather
-short durations and non repeating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

difference between data and chart

A

-data is smooth and so you can see trends occurring
-this will help make more accurate sales forecast for your business as it smooths out any large fluctuations in data which may be down to weather or recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

limitations of moving average

A

-relies on what has happened in the past continuing to happen, and historical data is not always a good indicator of what might happen in the future
-high tech markets change happens rapidly and products have a short product life cycle therefore extrapolation can be misleading
-it is time consuming and complex and is only as reliable as the data out in
-use of moving averages doesn’t take into account how recent the data is
-doesn’t link with corporates objectives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

how to work out three point moving average

A

add the number before, itself and after the. divide by three

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

The variation

A

-once a brand has been established, the variation can be calculated. The variation is the difference between the actual sales and the rend (three month moving average) value.
the variation=actual sales-trend (3PMA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

the problem with 3 point moving average

A

-business will often report their sales in quarter. look at demand changes in seasons.
-the problem with this data is that there is 3 cycle points, and not helpful when trying to forecast e.g. Christmas so we use 4 point moving average

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

how to work out 4 point moving average

A
  1. start by adding the four figures together
  2. divide by four
  3. do this again for the next four figures along
    4.add the two averages together and divide by 2, giving you the centred figure (attach this to the middle figure)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

A decision tree is

A

is a method of tracing the alternative outcome of any decision. The likely results can then be compared so that the bus can find the most profitable alternative

-the diagram maps out different sources of actions, possible outcomes of decisions and point where decisions have to be made
-calculations based on the decision tree can be used to determine the best likely outcome for the business and hence the most suitable decision

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

🔲 (square) decision points

A

The points where decisions are made in the decision tree are represented by squares. The decision maker chooses between certain sources of action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

⃝ (circle) outcome points

A

points where there are different possible outcomes in a decision tree are represented by circles are called chance nodes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

probability or chance

A

-the likelihood of possible outcomes happening is represented by the probabilities in decision tree. The chance of particular outcome happening is given a value, the value will be between 0-1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Expected value

A

this is the expected financial outcome of a decision

20
Q

-what do decision trees do

A

-enable a business to quantify decisions making
-useful when the outcomes are uncertain
-places a numerical valued on likely or potential outcomes
-allows comparison of different possible decisions to be made

21
Q

Uses of a decision tree

A

A business can’t afford to follow every option so it may use a decision tree to analyse the probability of a success in a choice of strategies e.g.
-new product launch
-new marketing campaign on the current product
-relocation to a new business

22
Q

Advantage of a decision tree diagram

A

-they can be useful for operational decision making
-enables effective use of black data
-probability allows flexibility
-scientific/objectives analysis to decision making
-encourages clear thinking and planning

23
Q

Dis of a decision tree diagram

A

-reliant on the accuracy of data used
-requires qualitative input to complete picture
-probability are only estimates
-real time data problem

24
Q

Critical pathway analysis

A

A project management technique that requires mapping out every key task that is necessary to complete a project

  • is a process that identifies which activities are critical (activities that must happen on schedule all day, delay the whole project), and which activities have float (activities that can be delayed without delaying the project)
25
Q

How can a business use critical paths?

A

-CPA is a management tool which helps a business identify how long a project will take in which tasks are critical in that project
-The diagrams are called network diagrams, as they are showing a network of tasks in the project
-Can determine the most efficient way to complete a collection of small tasks

26
Q

Network diagram

A

The number on the left-node number
top right number-earliest day that the task can start (EST)
Bottom right number-latest finish time that task can end (LFT)

27
Q

What do // mean on a critical path

A

The line means that task X is a critical task

28
Q

Calculate the earliest start time

A

EST of previous activity + duration of previous activity

29
Q

The float

A

When there is a difference between EST and LFT

30
Q

Free float is
And calc

A

Is found by taking the EST at the start of the task and the duration of the activity away from the EST at the end

Free float= EST is the end of activity - duration - EST start of activity

31
Q

Dummy activities

A

-Is one that is used purely to show dependency
-Not labelled as they take up no time/resources

32
Q

Advantages of CPA

A

-maximise efficiency in the use of time
-Improve efficiency and generate cost saving in the use of resources
-Beneficial to monitoring cash flow

33
Q

Disadvantages of CPA

A

-usefulness may be linked in complex and large scale operations
-The necessity of having clear and reliable information
-Skilled management and team philosophy is essential

34
Q

Free float is

A

The spare time available without delay, the next activity

35
Q

Total flow is

A

Is the spare time available without delaying the whole project

36
Q

Appraisal approach

A
37
Q

Payback period in capital budgeting refers to

A

Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment or to reach the breakeven point. Payback is, perhaps the simplest method of investment appraisal.

38
Q

Benefits of payback

A

-simple and easy to calculate and easy to understand the results
-Focuses on cash flow-good for use by businesses, where cash is a scarce resources
-emphasis speed of return: may be appropriate for businesses, subject to significant market change
-Straightforward to compare competing projects

39
Q

Drawbacks of payback

A

-Ignore cash flow, which arises after the payback has been reached i.e. doesn’t look at the overall project return
-Takes no account of the time value of money
-May encourage short-term thinking
-Ignores qualitative aspects of a decision
-doesn’t actually create a decision for the investment

40
Q

Average Rate of Return

A

Bus investment projects need to earn a satisfactory rate of return if they are to justify their allocation of scarce capital. The average rate of return method of investment appraisal looks at the total accounting return for a project to see if meets the target return.

41
Q

Benefits of ARR

A

-ARR provides a percentage return, which can be compared with a target return
-ARR looks at the whole probability of the project
-Focuses on probability-a key issue for shareholders

42
Q

Drawbacks of ARR

A

-doesn’t take into account cash flow-only profits (they may not be the same thing)
-Takes no account of the value of money
-Treat profits arising late in the project in the same way as those which might arise early

43
Q

Net present value

A

The net present value method uses an important concept in investment appraisal. Net present value calculates the monetary value now, of the projects future cash flow

44
Q

Benefits of NPV

A

-takes account of time value of money, placing emphasis on earlier cash flows
-Looks at all the cash flow involved through the life of the project
-Use of discount produces the impact of long-term less likely cash flow
-has a decision making mechanism reject projects with negative NPV

45
Q

Drawbacks of NPV

A

-more complicated method users may find it hard to understand
-difficult to select the most appropriate discount rate-may lead to good projects being rejected
-The NPV calculation is very sensitive to initial investment costs

Business-T (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions