What Analysis Assesses the Relative Probability That Any Particular Event

question 1

Multiple Choice

What analysis assesses the relative probability that any particular event will take place and cause operation or reputation damage?

• A) Magnitude analysis
• B) Likelihood analysis

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Definitions:

Gross Profit Ratio

A profitability ratio calculated as gross profit divided by net sales, indicating the percentage of sales revenue that exceeds the cost of goods sold.

Average Cost

A method for inventory valuation that calculates the cost of goods sold and ending inventory based on the average cost of all items purchased.

Retail Inventory Method

An accounting process used by retailers to estimate inventory value by converting the retail value of inventory to a cost basis, based on the relationship between cost and retail price.

Ending Inventory

The value of goods available for sale at the end of an accounting period.