ABC analysis

(noun)

The ABC analysis is a business term used to define an inventory categorization technique often used in materials management. It is also known as Selective Inventory Control. Policies based on ABC analysis: A ITEMS, very tight control and accurate records; B ITEMS, less tightly controlled, and good records; and C ITEMS, simplest controls possible and minimal records.

Related Terms

Examples of ABC analysis in the following topics:

  • ABC Technique

    • The ABC analysis is an inventory categorization technique often used in material management wherein accuracy and control decreases from A to C.
    • The ABC analysis is a business term used to define an inventory categorization technique often used in material management.
    • It is also known as "Selective Inventory Control. " Policies based on ABC analysis:
    • The ABC analysis suggests that inventories of an organization are not of equal value.
    • Differentiate different types of inventory items based on ABC inventory analysis

  • Benefits of Inventory Management

    • It also may include ABC analysis, lot tracking, cycle counting support, etc.

  • Inventory Costs

    • It also may include ABC analysis, lot tracking, cycle counting support, etc.

  • Inputs to the Production Schedule

    • It also may include ABC analysis, lot tracking, cycle counting support, etc.

  • Yield to Maturity

    • For instance, you buy ABC Company bond which matures in 1 year and has a 5% interest rate (coupon) and has a par value of $100.
    • If you hold the bond until maturity, ABC Company will pay you $5 as interest and $100 par value for the matured bond.

  • Trend Analysis

    • In addition to using financial ratio analysis to compare one company with others in its peer group, ratio analysis is often used to compare the company's performance on certain measures over time.
    • Trend analysis can be performed in different ways in finance.
    • Fundamental analysis, on the other hand, relies not on sentiment measures (like technical analysis) but on financial statement analysis, often in the form of ratio analysis.
    • Creditors and company managers also use ratio analysis as a form of trend analysis.
    • Analyze the benefits and challenges of using trend analysis to evaluate a company

  • Balance Sheet Analysis

    • Balance sheet analysis is process of understanding the risk and profitability of a firm through analysis of reported financial information.
    • Balance sheet analysis consists of 1) reformulating reported Balance sheet, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted Balance sheet.
    • Two types of ratio analysis are performed: 3.1) Analysis of risk and 3.2) analysis of profitability:
    • Risk analysis consists of liquidity and solvency analysis.
    • Cash flow analysis is also useful.

  • Interpreting Ratios and Other Sources of Company Information

    • Financial statement analysis, also known as financial analysis, is the process of understanding the risk and profitability of a company through the analysis of that company's reported financial information.
    • There are four methods for making these types of comparisons: vertical analysis, horizontal analysis, ratios, and trend percentages.
    • In a vertical analysis, each item is expressed as a percentage of a significant total.
    • This type of analysis is especially helpful in analyzing income statement data .
    • In vertical analysis each item is expressed as a percentage of a significant total.

  • Using Financial Statements to Understand a Business

    • Two types of ratio analysis are analysis of risk and analysis of profitability:
    • Risk Analysis: Analysis of risk detects any underlying credit risks to the firm.
    • Risk analysis consists of liquidity and solvency analysis.
    • Profitability analysis: Analyses of profitability refer to the analysis of return on capital.
    • Explain how a company would use the financial statements to perform risk analysis and profitability analysis

  • Sensitivity Analysis

    • Sensitivity analysis determines how much a change in an input will affect the output.
    • Sensitivity analysis is a statistical tool that determines how consequential deviations from the expected value occur.
    • Sensitivity analysis can be useful for a number of reasons, including:
    • The sensitivity analysis entails changing each variable and seeing how that changes the output .
    • Sensitivity analysis determines how much an output is expected to change due to changes in a variable or parameter.