3.3 Flashcards
centring
a method used in the calculation of a moving average where the average is plotted or calculated in relation to the central figure
correlation
the relationship between two sets of variables
correlation coefficient
a measure of the extent of the relationship between two sets of variables
moving average
a succession of averages derived from successive segments of a series of values
scatter graph
a graph showing the performance of one variable against another independent variable on a variety of occasions
it is used to show whether there is correlation between two variables
time series analysis
a method that allows a business to predict future levels from past figures
average rate of return or
accounting rate of return (ARR)
a method of investment appraisal that measures the net return per annum as a percentage of the initial spending
ARR% = net return (profit) per annum / capital outlay (cost) x100
capital cost
the amount of money spent when setting up a new venture
discounted cash flow (DFC)
a method of investment appraisal that takes interest rates into account by calculating the present value of future incomes
investment appraisal
the evaluation of an investment project to determine whether or not it is likely to be profitable
- allows businesses to make comparisons between different investment projects
net cash flow
cash inflows - cash outflows
net present value (NPV)
the present value of future income from an investment project, minus the cost
payback period
the amount of time it takes to recover the cost of an investment project
present value
the value today of a sum of money available in the future
