What Is the Connection Between Trend and Ratio Analysis?
The trend analysis method is an analysis method that analyzes the change trend of the base period through the relevant indicators, finds problems from them, and provides clues for tracking and checking accounts. For example, through the analysis of the trend of the corresponding account collection, you can make a general evaluation of the possibility of bad debts and the payment due. The trend analysis method can use relative or absolute numbers. [1]
Trend analysis
- The trend analysis method is an analysis method that analyzes the change trend of the base period through the relevant indicators, finds problems from them, and provides clues for tracking and checking accounts. For example, through the analysis of the trend of the corresponding account collection, you can make a general evaluation of the possibility of bad debts and the payment due. The trend analysis method can use relative or absolute numbers. [1]
- Through the trend analysis, we can know the changes of the company's financial operations and provide help in predicting the future development direction. [2]
- Determine the main reasons for the changes in the company's financial position and operating results;
- Determine whether the development trend of the company's financial position and operating results is beneficial to investors;
- The trend analysis method is generally divided into four categories: (1) longitudinal analysis method; (2) horizontal analysis method; (3) standard analysis method; (4) comprehensive analysis method. In addition, the trend analysis method also has a trend prediction analysis.
- Application of trend prediction analysis
- Arithmetic averaging method is applicable to sales forecast of products with small monthly sales fluctuations
- Trend analysis
- Moving average method is suitable for product forecast with slight fluctuations in sales volume
- Exponential smoothing