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When a weighted mean is used, the variance of the weighted sample is different from the variance of the unweighted sample. The biased weighted sample variance σ ^ w 2 {\displaystyle {\hat {\sigma }}_{\mathrm {w} }^{2}} is defined similarly to the normal biased sample variance σ ^ 2 {\displaystyle {\hat {\sigma }}^{2}} :
The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory. There are two commonly used average cost methods: Simple weighted-average cost method and perpetual weighted-average cost method. [2]
Weighted average cost of capital approach (WACC) Derive a weighted cost of the capital obtained from the various sources and use that discount rate to discount the unlevered free cash flows from the project; Advantages: Overcomes the requirement for debt capital finance to be earmarked to particular projects
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
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. It is the total pool of profits available to provide a cash return to those who provide capital to the firm.
In this case, the present value is computed by discounting the free cash flows at the company's weighted average cost of capital (WACC). Some investors prefer using free cash flow instead of net income to measure a company's financial performance and calculate the intrinsic value of the company, because free cash flow is more difficult to ...
For normally distributed random variables inverse-variance weighted averages can also be derived as the maximum likelihood estimate for the true value. Furthermore, from a Bayesian perspective the posterior distribution for the true value given normally distributed observations and a flat prior is a normal distribution with the inverse-variance weighted average as a mean and variance ().
While other control charts treat rational subgroups of samples individually, the EWMA chart tracks the exponentially-weighted moving average of all prior sample means. EWMA weights samples in geometrically decreasing order so that the most recent samples are weighted most highly while the most distant samples contribute very little. [2]: 406