Explain When It Is Better to Use the Continuous Inventory

question 36

Essay

Explain when it is better to use the continuous inventory system and when it is better to use the periodic inventory system.Discuss how the ABC classification system provides guidance in selecting one versus the other.

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Definitions:

Yield To Maturity

The total return expected on a bond if it is held until the maturity date, considering all payments from the bond including coupon and principal repayment.

Coupon

The interest rate paid every year on a bond, presented as a percentage of its par value.

Maturity

The period until the final payment date of a loan, bond, or other financial instrument.

Altman's Z Scores

A formula developed by Edward Altman in the 1960s used to predict the likelihood of a business going bankrupt within two years, based on various corporate income and balance sheet values.