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Weighted average cost is a method of calculating ending inventory cost. It can also be referred to as "WAVCO". It takes cost of goods available for sale and divides it by the number of units available for sale (number of goods from beginning inventory + purchases/production). This gives a weighted average cost per unit. A physical count is then ...
EVA = (r − c) × capital [the spread method, or excess return method] where r = rate of return, and c = cost of capital, or the weighted average cost of capital (WACC). NOPAT is profits derived from a company's operations after cash taxes but before financing costs and non-cash bookkeeping entries.
Two very popular methods are 1)- retail inventory method, and 2)- gross profit (or gross margin) method. The retail inventory method uses a cost to retail price ratio. The physical inventory is valued at retail, and it is multiplied by the cost ratio (or percentage) to determine the estimated cost of the ending inventory. The gross profit ...
This may require considerable recordkeeping. This method cannot be used where the goods or items are indistinguishable or fungible. Average cost. The average cost method relies on average unit cost to calculate cost of units sold and ending inventory. Several variations on the calculation may be used, including weighted average and moving average.
The Marshall-Edgeworth index, credited to Marshall (1887) and Edgeworth (1925), [11] is a weighted relative of current period to base period sets of prices. This index uses the arithmetic average of the current and based period quantities for weighting. It is considered a pseudo-superlative formula and is symmetric. [12]
The weighted arithmetic mean is similar to an ordinary arithmetic mean (the most common type of average), except that instead of each of the data points contributing equally to the final average, some data points contribute more than others.
For example, relating shipping and storage costs to a specific inventory item becomes difficult. These numbers often need to be estimated, diminishing the specificity advantage of the specific identification method. Thus, this method is generally limited to large, high-ticket items which can be easily identified specifically (such as tract houses).
Average corrected P/E ratio * net profit at the end of the forecast period. Example: VirusControl is expecting a net profit at the end of the fifth year of about €2.2 million. They use the following calculation to determine their future value: ((17.95 + 21.7 + 20.8) / 3) * 2,200,000 = €44.3 million