Four Types of Forecast Error Measures Can Be Used

question 6

Multiple Choice

Four types of forecast error measures can be used. Which one of the following is not one of the four types?

• A) cumulative sum of forecast errors
• B) exponential smoothing for trends
• C) mean squared error
• D) mean absolute deviation

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Definitions:

Equity Method

An accounting technique used by a company to record its investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investing company's share of the investee's net income or losses.

Net Income

Net income refers to the total profit of a company after all expenses, taxes, and deductions have been subtracted from total revenue.

Owned Subsidiary

A company whose majority of shares or voting rights are held by another company, making it a controlling entity.

Equity Method

The equity method is an accounting technique used by firms to assess the profits earned by their investments in other companies by reporting these profits in proportion to their ownership.