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Definition of activity analysis
the process of detailing the various repetitive actions that are performed in making a product or
Ratios that measure how effectively the firm is managing its assets.
A method developed by BARRA, a consulting firm in
An analysis of the level of sales at which a project would make zero profit.
A statistical technique that identifies clusters of stocks whose returns are highly correlated
The representing of accounting information over multiple years as percentages
A method of analysis in which a firm is compared to others that have a desired
The process of analyzing information on companies and bond issues in order to estimate the
A statistical process that links the probability of default to a specified set of financial ratios.
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
An analysis of returns using total return to assess performance over some investment horizon.
The process of dividing each expense item of a given year by the same expense item in
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
Statistical technique for distinguishing between two groups on the
The decomposition of a money manager's performance results to explain
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
A statistical technique that can be used to estimate relationships between variables.
The use of horizon analysis to project bond total returns under different reinvestment rates
analysis of the effect on a project's profitability due to changes in sales, cost, and so on.
Security analysis that seeks to detect and interpret patterns in past security prices.
The process of dividing each expense item in the income statement of a given year by net
A financial analysis technique that relates key amounts on the income statement and balance sheet to a 100 percent or base figure for the present and previous year.
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
A method of analysing financial reports to interpret trends and make comparisons by using ratios – two numbers, with one generally expressed as a percentage of the other.
An approach to understanding how changes in one variable of cost–volume–profit analysis are affected by changes in the other variables.
A method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved.
A method of relating numbers from the various financial statements to one another in order to get meaningful information for comparison.
activity based costing (ABC)
A relatively new method advocated for the
capital investment analysis
Refers to various techniques and procedures
The process of using financial ratios, calculated from key accounts
a repetitive action performed in fulfillment of business functions
activity-based budgeting (ABB)
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
activity-based costing (ABC)
a process using multiple cost drivers to predict and allocate costs to products and services;
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
a segment of the production or service
a measure of the demands on activities and,
an activity that is necessary for the operation of the business but for which a customer would not want to pay
an analytical technique that uses statistical
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
cost driver analysis
the process of investigating, quantifying,
a process of evaluating changes that
least squares regression analysis
a statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares
non-value-added (NVA) activity
an activity that increases the time spent on a product or service but that does not increase its worth or value to the customer
a method of ranking the causes of variation
a process of determining the amount of change that must occur in a variable before a different decision would be made
value-added (VA) activity
an activity that increases the worth of the product or service to the customer
the process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences
Statistical analysis techniques that quantify the
Activity-based costing (ABC)
A cost allocation system that compiles costs and assigns
The 80:20 ratio that states that 20% of the variables included in an
analysis of the level of sales at which the company breaks even.
Procedure to determine the likelihood a customer will pay its bills.
Project analysis given a particular combination of assumptions.
analysis of the effects of changes in sales, costs, and so on, on project profitability.
Estimation of the probabilities of different possible outcomes, e.g., from an investment project.
The calculation and comparison of the costs and benefits of a policy or project.
The examination of failure incidents to identify components
An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).
Financial Trend Analysis
Process of analyzing financial statements of a company for any continuing relationship.
fixed expenses (costs)
Expenses or costs that remain the same in amount,
attribute-based costing (ABC II)
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
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