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A Disadvantage of Using Actual Input Data from Past Periods

question 116

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A disadvantage of using actual input data from past periods is that past data can include inefficiencies such as wastage of direct materials.


Definitions:

Annual Turnover

The total sales or revenue a company generates in one year.

ROI Analysis

A financial metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments, calculated by dividing the net profit from the investment by the initial cost of the investment.

Net Operating Income

The income generated from normal business operations, calculated as revenues minus operating expenses and excluding income from investments and taxes.

Average Operating Assets

The average value of assets used by a company in its operational activities, calculated over a certain period of time for analysis of performance efficiency.

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