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When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode?
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When a firm registers both profits and losses which of the following m...
Central Tendency Measures
Central tendency measures are used to determine the central or typical value of a dataset. The most common measures of central tendency are mean, median, and mode. However, when a firm registers both profits and losses, one of these measures cannot be considered.
Mean and Median
The mean is the average of all the values in a dataset. It is calculated by adding up all the values and dividing by the number of values. However, in the case of a firm registering both profits and losses, the mean cannot be considered since it can be easily skewed by extreme values (i.e. very high profits or very low losses).
The median, on the other hand, is the middle value of a dataset when arranged in order. It is not affected by extreme values, making it a more reliable measure of central tendency in cases where extreme values are present.
Mode and Geometric Mean
The mode is the value that appears most frequently in a dataset. It is not affected by extreme values, but it may not be a reliable measure of central tendency when there are multiple modes in a dataset.
The geometric mean (GM) is the nth root of the product of n values in a dataset. It is commonly used in financial analysis to calculate compound growth rates. However, it cannot be used in cases where there are negative values, such as losses.
Conclusion
In conclusion, when a firm registers both profits and losses, the geometric mean cannot be considered as a measure of central tendency due to its inability to handle negative values. The median is the most reliable measure in this case, while the mode can also be used as a supplementary measure. The mean should be avoided due to its susceptibility to extreme values.
Central tendency measures are used to determine the central or typical value of a dataset. The most common measures of central tendency are mean, median, and mode. However, when a firm registers both profits and losses, one of these measures cannot be considered.
Mean and Median
The mean is the average of all the values in a dataset. It is calculated by adding up all the values and dividing by the number of values. However, in the case of a firm registering both profits and losses, the mean cannot be considered since it can be easily skewed by extreme values (i.e. very high profits or very low losses).
The median, on the other hand, is the middle value of a dataset when arranged in order. It is not affected by extreme values, making it a more reliable measure of central tendency in cases where extreme values are present.
Mode and Geometric Mean
The mode is the value that appears most frequently in a dataset. It is not affected by extreme values, but it may not be a reliable measure of central tendency when there are multiple modes in a dataset.
The geometric mean (GM) is the nth root of the product of n values in a dataset. It is commonly used in financial analysis to calculate compound growth rates. However, it cannot be used in cases where there are negative values, such as losses.
Conclusion
In conclusion, when a firm registers both profits and losses, the geometric mean cannot be considered as a measure of central tendency due to its inability to handle negative values. The median is the most reliable measure in this case, while the mode can also be used as a supplementary measure. The mean should be avoided due to its susceptibility to extreme values.
Community Answer
When a firm registers both profits and losses which of the following m...
It's GM...
whenever we discuss about profits and losses of the firm we just use GM Central tendency
whenever we discuss about profits and losses of the firm we just use GM Central tendency
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When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode?
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When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode?.
When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When a firm registers both profits and losses which of the following measure of central tendency cannot be considered? AM GM median or mode?.
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