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

Cost centre, a)   What are the pre-requisites of installation of responsibi...

a)   What are the pre-requisites of installation of responsibility accounting system? b)  Diffrence between 'cost centre' and 'profit centre'.

Illustrate about foreign exchange earnings, Q. Illustrate about foreign exc...

Q. Illustrate about foreign exchange earnings? In theory foreign exchange earnings must not be hedged as the chances of an adverse movement are equivalent to those of a favoura

Mba 7200, nd held it until it matured, what annual rate of return would she...

nd held it until it matured, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16

Discuss the different forms of financing, Question 1 Explain the concept ...

Question 1 Explain the concept and phases of capital budgeting Question 2 Define and explain the methods of demand forecasting Question 3 Mention the elements o

Internal rate of return (irr), Internal Rate of Return (IRR) : This rat...

Internal Rate of Return (IRR) : This rate attempts to find the earnings rate, which equates the current value of the streams of earnings to the investment outlay. IRR is descri

Portfolio Management, Portfolio Project The purpose of this project is to h...

Portfolio Project The purpose of this project is to help you to gain an understanding of how the stock market works and of the relationship between theory and practice. You are gi

Define the balance of payments, Define the balance of payments. Answer:  ...

Define the balance of payments. Answer:  The balance of payments that is abbreviated as BOP can be defined as the statistical record of a country’s international transactions ove

Case let 2, how would you judge the potential profit of Bajaj Electronics o...

how would you judge the potential profit of Bajaj Electronics on the first year of sales to booth plastice and give your views to to increase the profit

What is the primary assumption behind experience approach, What is the prim...

What is the primary assumption behind the experience approach to forecasting? The experience act to forecasting is based on the assumption that things will happen a certain way

Types of efficiency-efficient market hypothesis , Types of Efficiency   ...

Types of Efficiency    Efficient market theory can be described in three ways: 1) Allocative Efficiency: A market is allocatively proficient when it directs savings tow

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