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Trend analysis

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Trend analysis

  1. 1. Trendanalysis
  2. 2. SUBMITTED TODR. ASHWANI BHALLA(PROGRAMME CO-ORDINATOR) SUBMITTED BY KULVIR SINGH 6304
  3. 3. MeaningMeaning of Trend Analysis An aspect oftechnical analysis that tries to predict thefuture movement of a stock based or salebased on past data. Trend analysis is basedon the idea that what has happened in thepast gives traders an idea of what willhappen in the future.
  4. 4. DefinitionDefinition in Concise Oxford Dictionary which is that a trend is ‘a general direction and tendency’.
  5. 5. Procedure ForCalculation Trends One year is taken as a base year. Generally, the first or the last year is taken as base year. The % figures of base year are taken as 100. Trend percentage are calculated in relation to base year. If a figure in other year is less than the figure in base year the trend percentage will be less than 100 and it will be more than 100 if figure is more than base year. Each year’s figure is divided by base year’s figure.
  6. 6. For Exampleyear sales stock EBT (in Lakhs.)2008 1881 709 3212009 2340 781 4352010 2655 816 4582011 3021 944 5272012 3768 1154 672
  7. 7. Formula=Current Year’s figure * 100 / Base Year’s figure
  8. 8. Trend percentages (Base year 2008=100)(In lakhs)Year Sales Stock EBT Amt. % Amt. % Amt. %2008 1881 100 709 100 321 1002009 2340 124 781 110 435 1362010 2655 141 816 115 458 1432011 3021 161 944 133 527 1642012 3762 200 1154 162 672 209
  9. 9. Graphical View of Trend Analysis250200150 Sales Stock100 EBT 50 0 2008 2009 2010 2011 2012
  10. 10. Interpretation The sales have continuously increased in all years up to 2012. The percentage in 2012 is 200 as compared to 100 in 2008. The increase in sales is quite satisfactory. The figures of stock have also increased from 2008 to 2012. The increase in stocks is more in 2011 and 2012 a compared to earlier years. Profit before tax substantially increased. In five years period it has more than doubled. The comparative increase in profits is much higher in 2011 and 2012 as compared to 2010.
  11. 11. Why Do Trend Analysis Comparing one time period to another time period. Comparing one geographic area to another. Comparing one group to another. Making future projections. For assessment of our output. For comparing with standards. Comparing with other organizations.
  12. 12. Kulvir Singh

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