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Flashcard 1450686418188

Tags
#cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
Question
The minimum point on the average total cost curve defines the output level that has the least cost. However, the [...] may not correspond to the ATC-minimum point.
Answer
quantity that maximizes profit


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The minimum point on the average total cost curve defines the output level that has the least cost. However, the quantity that maximizes profit may not correspond to the ATC-minimum point.

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cost. However, the minimum point on the AVC does not correspond to the least-cost quantity for average total cost. In Exhibit 13, average variable cost is minimized at 2 units, whereas average total cost is the lowest at 3 units. <span>Average total cost (ATC) is calculated by dividing total costs by quantity or by summing average fixed cost and average variable cost. For instance, in Exhibit 13, at 8 units ATC is 125 [calculated as (1,000 ÷ 8) or (AFC + AVC = 12.5 + 112.5)]. Average total cost is often referenced as per-unit cost and is frequently called average cost. The minimum point on the average total cost curve defines the output level that has the least cost. The cost-minimizing behavior of the firm would dictate operating at the minimum point on its ATC curve. However, the quantity that maximizes profit (such as Q 3 in Exhibit 17) may not correspond to the ATC-minimum point. The minimum point on the ATC curve is consistent with maximizing profit per-unit, but it is not necessarily consistent with maximizing total profit. In Exhibit 13, the least-cost point of production is 3 units; ATC is 75, derived as [(225 ÷ 3) or (33.3 + 41.7)]. Any other production level results in a higher ATC. Marginal cost (MC) is the change in total cost divided by the change in quantity. Marginal cost also can be calculated by taking the change in total variable cost and divi







Articulate the purpose and context of the analysis.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
What is the purpose of the analysis? Evaluating an equity or debt investment? Or issuing a credit rating?

The context needs to be defined clearly too: Who is the intended audience? What is the nature and content of the final report? What is the time frame? What is the budget?

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Collect input data.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
Gather a company's financial data from financial statements and other sources described in Subject c (other financial information sources). Also gather information on the economy and industry to understand the environment in which the company operates.

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Process data.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
Compute ratios or growth rates, prepare common-size financial statements, create charts, perform statistical analyses, make adjustments to financial statements, etc.

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Analyze / interpret the processed data.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
Interpret the output to support a conclusion (e.g., a buy decision).

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Develop and communicate conclusions and recommendations.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
Communicate the conclusion or recommendation in an appropriate format.

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Follow up.
#reading-21-fra-intro #subject-5-financial-statement-analysis-framework
Periodic review is required to determine if the original conclusions and recommendations are still valid.

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Sócrates - Ora bem: o que Filebo afirma, é que, para todos os seres animados, o bem consiste no prazer e no deleite, e tudo o mais do mesmo gênero. De nossa parte, defendemos o princípio de que talvez não seja nada disso, mas que o saber, a inteligência, a memória e tudo o que lhes for aparentado, como a opinião certa e o raciocínio verdadeiro, são melhores e de mais valor que o prazer, para quantos forem capazes de participar deles, e que essa participação é o que há de mais vantajoso pode haver para os seres em universal, presentes e futuros

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