Objectives of averaging, Financial Management

The two main objectives are:

  1. To get at a single value: Measures of central value, by considering the mass of data in one single value, enable us to get a bird's-eye view of the entire data. Thus one value can represent thousands, lakh and even millions of values. For example, it is impossible and is hardly of any use to remember the incomes of individual companies in a particular industry. But if the average income is obtained by dividing the total income by the number of companies, we get one single value that represents the entire industry.

  2. To facilitate comparison: Reducing the mass of data to one single figure facilitates comparisons. Comparison can be made either at a point of time or over a period of time. For example, we can compare the average annual profits of different industries for a particular year, say, 20x3-x4 and thereby conclude which industry is the best or we can compare the growth percentage in sales of a particular industry for different time periods and thereby conclude as to whether the results are improving or deteriorating. Such comparisons are of immense help in framing suitable and timely policies.

Posted Date: 9/14/2012 12:55:58 AM | Location : United States







Related Discussions:- Objectives of averaging, Assignment Help, Ask Question on Objectives of averaging, Get Answer, Expert's Help, Objectives of averaging Discussions

Write discussion on Objectives of averaging
Your posts are moderated
Related Questions
Project Plan for my new business venture is attached) 1.     Your task is to take a look at every of the operational areas of the intended business, and verify  what financial i

Suppose spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950.  What is the minimum price which a six-month American call option along with a striking price of $0.6

Define the terms- Mergers and takeovers The terms takeovers and mergers are inter-related. When a company attains the majority of shares of another company, acquired company is

Interest rate risk is the risk wherein the investor in bonds faces the risk of a fall in his bond price as and when there is a rise in the market interest r

How exchange of principal and interest in one currency? Expalin

Functions of Derivatives Market: To reduce risk or eliminate risks some ways and methods are there. Risk in the capital market can be reduced by diversification or putting eggs

i need help writing a paper on a healthcare organization and reviewing its financial operations based on data available from 6 sources

Explain what a bond is and discuss its nature as a "fi xed income" security.Discuss important terms in relation to bonds as the "price", "maturity", "current yield", "yield to matu

The sales manager considers that there will be substantial foreign exchange risk in trading with Werland. Payment is unpaid in Werland francs in three months time. The current ster

Federal Funds Rate The interest rate that American banks that have funds in excess of the needs dictated by the Federal Reserve use to make overnight loans to banks whose