decision making techniques

Question 1

time series analysis is

Answer 1

quantitative sales forecasting
allows a business to predict future sales from past figures
want to identify trends

Question 2

3 limitations of time series analysis

Answer 2

unreliable
assume same trends will occur
ignores qualitative data

Question 3

investment appraisal is

Answer 3

process used to determine whether funds given to the business for investment are likely to be profitable

Question 4

3 investment appraisals

Answer 4

payback
average rate of return
discounted cash flow

Question 5

payback formula

Answer 5

sum invested / net cash per time period

Question 6

payback is

Answer 6

amount of time it takes for business to recover the initial amount invested
best are those that show short pay back time

Question 7

average rate of return formula

Answer 7

average annual profit / initial outlay x 100

Question 8

average rate of return is

Answer 8

comparison with other projects

takes into account the level of risk

Question 9

discounted cash flow is

Answer 9

process of calculating present value of an investment future cash flow
to arrive at a current value of investments

Question 10

net present value is

Answer 10

the difference between the present value of future cash flow and amount invested in a project

Question 11

all three investment appraisal techniques are based on

Answer 11

cash flow forecast which may be innaccurate

Question 12

critical path analysis is

Answer 12

used to find cheapest and fastest way to complete a task

Question 13

total float is

Answer 13

LFT - duration - EST

Question 14

free float is

Answer 14

EST (node after) - EST (node before) - duration

Question 15

the critical path is

Answer 15

the tasks that take the longest time and determine the length of the project