- What is trend analysis?
- Benefits of using trend analysis
Trend Analysis is a technique used to project the current and future movement of events through a time series data analysis. It involves the comparison of data over a specific period of time to spot a pattern or trend. Trend analysis methods can be used to forecast how the business will perform. However, it is also important to be aware of the method’s limitations.
“When business variables including sales, revenue or customer complaints change over time, the patterns that make up the trends can be observed. This allows businesses to project historical data to obtain future values,” says an analyst at Infiniti Research.
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You may also like to read some of our recent articles on trend analysis:
- Analyzing the Latest Market Trends and Industry Developments in the German Retail Market with Trend Analysis Solution
- Enhancing ROI by 19% for a Beverage Packaging Company – Market Trend Analysis Engagement
- Identifying Trends and Opportunities in the US Food Packaging Market | Infiniti’s Market Trend Analysis Engagement
Benefits of trend analysis
Using market trend analysis, analysts can make a well-charted out comparison between two or more companies for a given period of time. It can also be used to compare the company’s performance with the industry average. Trend analysis methods make it simpler to ascertain the strengths and weaknesses of a particular firm with respect to other related firms operating in the industry. As a result, companies can quickly identify the gaps and implement the necessary changes.
Measuring financial performance
Trend analysis can be used to undertake a comparative study to measure the financial performances of the firm over a period of time. Through this the management to take decisions for the future and alter their processes or actions accordingly. Trend analysis is more effective when compared to the absolutes data, facilitating top management in better decision-making.
Understanding liquidity positions
Trend analysis methods help analysts and the management to understand the short-term liquidity position of the company. It is also an ideal tool to measure long-term solvency position of a firm over the years with using related financial trend ratios.
Measuring profitability position
Using market trend analysis, companies can measure their profitability positions over a given period of time. This can be done using some common related financial trend ratios including operating ratio, net profit ratio, and gross profit ratio.
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About Infiniti Research
Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit: https://www.infinitiresearch.com/about-us