What Are the Advantages and Disadvantages of the Use of the Factor-Rating

question 6

Essay

What are the advantages and disadvantages of the use of the factor-rating method?

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Definitions:

Net Income

Company's earnings following the deduction of all expenses and taxes from total revenue.

Capital Intensity Ratio

A financial metric that estimates the amount of investment in capital assets a company needs relative to its labor force to generate revenue.

Maximum Capacity

The highest level of output that a company can sustain to produce in a given period under normal conditions.

Proportional

Proportional refers to a relationship or distribution where quantities maintain the same relative size or ratio to each other, often applied in financial contexts like taxation or distribution of profits.