What is Trend Analysis?

Описание: Short & Simple Definition: A financial analysis technique that compares a company’s financial data over several periods to identify a trend or direction of change.

Your support helps me keep creating free videos. Please like, share, and subscribe to help this accounting knowledge reach more people.

Free Resources Here: https://tinyurl.com/AccountingWithIndy

Real-World Example: Imagine you're tracking your grades for a course throughout the semester. You notice that your scores on tests have been consistently improving. That's trend analysis in action—you're looking at a series of data points to spot a pattern. Businesses do the same with sales, costs, and profits to see if they're on an upward or downward trend.

Deeper Dive: Trend analysis, also known as horizontal analysis, is a powerful tool for understanding a company's performance over time. It involves calculating the percentage change in financial statement line items from a base year to subsequent years. By doing this, you can see if sales are consistently growing, if expenses are increasing faster than revenue, or if a company is becoming more profitable. This analysis helps identify areas of strength or weakness and is essential for forecasting a company’s future performance.

Other terms:
Horizontal analysis
Time series analysis
Directional analysis

#TrendAnalysis
#FinancialAnalysis
#Accounting
#BusinessGrowth
#Investing
#FinancialLiteracy
#DataAnalytics
#FinanceTips
#Accounting101