Chain index numbers, Financial Management

Assignment Help:

Chain Index Numbers

So far, we have constructed index numbers with a fixed base. Sometimes, comparison between the current/given year and the base year becomes meaningless once time elapses making the base year remote. An index can be made more representative by using the chain base method of constructing index numbers. In this method, the base year is not fixed but changes from year to year. Here, new relatives are constructed for each year with the previous year as base. The new relatives enable comparison between one period and another period which succeeds it and hence referred to as 'Link relatives'. When these link relatives are associated to a common base, and chained together by successive multiplication, the formation of a chain index number results.

Chain index for a given year

1777_chain index numbers.png

where,

  Link relative =  348_chain index numbers1.png x 100

Related Discussions:- Chain index numbers

Calculate the ex-right stock price, DIY Inc. plans to raise $200,000 with a...

DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding. a. If DIY sets the subscription price to be $80

Explain money have time value, Why does money have time value? Positive i...

Why does money have time value? Positive interest rates point out that money has time value.  While one person lets another borrow money, the first person needs compensation in e

Explain cash flow budget and npv in lkl plc, LKL PLC Project VZ (...

LKL PLC Project VZ (a) Cash Flow budget and NPV WORKINGS

Leverage, what is the meaning of market feasibility? What are its different...

what is the meaning of market feasibility? What are its different types with their degree?

Determine the key points in the turnbull report, Key points in the Turnbull...

Key points in the Turnbull Report: Have a defined process for review of effectiveness of internal control. Review regular reports on internal control. Consider key

Describe societys interests can influence financial managers, Describe how ...

Describe how society's interests can influence financial managers. Sometimes the interests of a business firm's owners aren't the same as the interests of society.  For illustr

Computation of value of the firm, Q. Computation of Value of the Firm? ...

Q. Computation of Value of the Firm? Computation of Value of the Firm (V) & Overall Cost of Capital:- NI                    = EBIT - Interest = 50,000 - 20,000 = 30,000

Discuss the process of maximise profits, Discuss the process of  Maximise ...

Discuss the process of  Maximise Profits Let's first look at profit maximisation.  Profit (also known as net income or earnings) canbe defined as the amount a business earns af

What are classes of institutions that issue bonds in the usa, What are the ...

What are the main classes of institutions that issue bonds in the USA? There are three major classes of institutions which issue bonds in the USA: national governments, local g

Effective annual rate, You are interested in saving money for your first ho...

You are interested in saving money for your first house. Your plan is to make regular deposits into brokerage account which will earn 14%. Your first deposit of $5,000 will be made

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd