Describe Principal Components Analysis and Common Factor Analysis and the Differences

question 46

Essay

Describe principal components analysis and common factor analysis and the differences between the two methods of factor analysis.

---

Definitions:

Long-Lived Assets

Assets that are expected to provide economic benefits over a period longer than one year, such as buildings and machinery.

Profit and Loss Comparisons

Analyzing and contrasting the income and expenses over different periods to understand financial performance trends.

Impairment Guidelines

Guidelines used to determine when an asset's carrying amount may not be recoverable, leading to the need to record an impairment loss.

Identifiable Cash Flows

Cash flows that can be directly associated with a specific project, investment, or division within a company, making it possible to assess its financial performance.