What is abc analysis, Financial Management

Assignment Help:

Q. What is ABC Analysis?

ABC Analysis: - ABC Analysis is a method of controlling different items of inventory. Generally a firm has to maintain several different items as inventory. All these items aren't equally important. Thus it isn't desirable to keep same degree of control on all these items. The firm must give more attention to those items whose value is higher in comparison to others.

In this analysis all the items of inventory are classified into three categories:-

(i) In category 'A' those items are incorporated which are small in number say 15 percent of the total items however they are quite valuable the value being 70 percent of the total value of the inventory.

(ii) Category 'B' stands midway as well as consists of items which are 30 percent in number and 20 percent of the total value.

(iii) In category 'C' those items are comprised which are quite large in number say 55 percent of the total items but carrying little value say 10 percent of the total value of inventory.


Related Discussions:- What is abc analysis

Explain contingent exposure, Explain contingent exposure and define the adv...

Explain contingent exposure and define the advantages of using currency options to manage this type of currency exposure. Answer: Companies may come across a state where they m

Enhance or maintain its image and reputation, a) Marketing might be vital t...

a) Marketing might be vital to an organisation such as WHSG for several reasons, including: • The need to be a focus for the right kind of students to the school (there are riva

Marketing, How to use integrated promotional mix to achieve marketing objec...

How to use integrated promotional mix to achieve marketing objectives

internal rate of return decision rule, Towson Enterprises has recognized t...

Towson Enterprises has recognized two mutually exclusive (can’t do both) projects.  The relevant cash flows and timing of those cash flows are shown in the following table.  Suppos

How do risk-averse investors compensate, How do risk-averse investors compe...

How do risk-averse investors compensate for risk when they take on investment projects? For the reason of risk aversion, people demand elevated rates of return for taking on hi

Show objections against profit maximization, Q. Show objections against pro...

Q. Show objections against profit maximization? 1) Profit cannot be ascertained well in advance to express the. Probability of return as future is Uncertain. It is not at all p

Simple average of the outcomes - time constraint, 1. Your welfare depends o...

1. Your welfare depends on how much time you travel T and how much time you play P and is the product of the two, i.e.,  W = T * P (a) The total amount of time you have is 10 ho

Calculate the expected return and risk, QUESTION The Stock of Max Ltd ...

QUESTION The Stock of Max Ltd performs relatively well compared to other stocks during recessionary periods. The stock of Bax Ltd, on the other hand, does well during growth p

Explain the significant feature of the wealth maximisation, Explain the sig...

Explain the significant feature of the wealth maximisation The significant feature of the wealth maximisation criterion is that it considers is that it considers both the quali

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