Trend analysis refers to collecting information over time to identify patterns and trends in the data that can help predict future outcomes. It is commonly used in fields like project management, finance, and marketing. Trend analysis calculates the percentage change between periods by taking the difference and dividing by the earlier value. Analyzing trends over multiple years involves dividing each annual value by the base year value to calculate trend percentages and identify how factors are changing relative to the base level.

1. Trend analysis
The term "trend analysis" refers to the concept of collecting information and attempting
to spot a pattern, or trend, in the information. In some fields of study, the term "trend
analysis" has more formally-defined meanings. [1] [2] [3]
In project management trend analysis is a mathematical technique that uses historical
results to predict future outcome. This is achieved by tracking variances in cost and
schedule performance. In this context, it is a project management quality control tool. [4]
[5]
Although trend analysis is often used to predict future events, it could be used to estimate
uncertain events in the past, such as how many ancient kings probably ruled between two
dates, based on data such as the average years which other known kings reigned.
[edit] History
Today, trend analysis often refers to the science of studying changes in social patterns,
including fashion, technology and the consumer behavior.
What Does Trend Analysis Mean?
An aspect of technical analysis that tries to predict the future movement of a stock based on past
data. Trend analysis is based on the idea that what has happened in the past gives traders an
idea of what will happen in the future.
Trend Analysis
Trend analysis
calculates the percentage change for one account over a period of time of two years or
more.
Percentage change
To calculate the percentage change between two periods:
1. Calculate the amount of the increase/(decrease) for the period by subtracting the earlier
year from the later year. If the difference is negative, the change is a decrease and if the difference is
positive, it is an increase.
2. Divide the change by the earlier year's balance. The result is the percentage change.
Calculation of Percentage Change

2. 20X1 20X0 Increase/(Decrease) Percent Change
Cash $ 6,950 $ 6,330 $ 620 9.8%
Accounts Receivable, net 18,567 19,330 (763) (3.9%)
Sales 129,000 103,000 26,000 25.2%
Rent Expense 10,000 0 10,000 N/M
Net Income (Loss) 8,130 (1,400) 9,530 N/M
Calculation notes:
1. 20X0 is the earlier year so the amount in the 20X0 column is subtracted from the amount
in the 20X1 column.
2. The percent change is the increase or decrease divided by the earlier amount (20X0 in
this example) times 100. Written as a formula, the percent change is:
3.
4. If the earliest year is zero or negative, the percent calculated will not be meaningful. N/M
is used in the above table for not meaningful.
5. Most percents are rounded to one decimal place unless more are meaningful.
6. A small absolute dollar item may have a large percentage change and be considered
misleading.
Trend percentages
To calculate the change over a longer period of time—for example, to develop a sales trend—follow the
steps below:
1. Select the base year.
2. For each line item, divide the amount in each nonbase year by the amount in the base
year and multiply by 100.
3. In the following example, 20W7 is the base year, so its percentages (see bottom half of
the following table) are all 100.0. The percentages in the other years were calculated by dividing
each amount in a particular year by the corresponding amount in the base year and multiply by 100.
Calculation of Trend Percentages
20X1 20X0 20W9 20W8 20W7
Historical Data
Inventory $ 12,309 $12,202 $12,102 $11,973 $11,743
Property & equipment 74,422 78,938 64,203 65,239 68,450
Current liabilities 27,945 30,347 27,670 28,259 26,737
Sales 129,000 97,000 95,000 87,000 81,000
Cost of goods sold 70,950 59,740 48,100 47,200 45,500
Operating expenses 42,600 38,055 32,990 29,690 27,050
Net income (loss) 8,130 (1,400) 7,869 5,093 3,812

3. 20X1 20X0 20W9 20W8 20W7
Trend Percentages
Inventory 104.8 103.9 103.1 102.0 100.0
Property & equipment 108.7 115.3 93.8 95.3 100.0
Current liabilities 104.5 113.5 103.5 105.7 100.0
Sales 159.3 119.8 117.3 107.4 100.0
Cost of goods sold 155.9 131.3 105.7 103.7 100.0
Operating expenses 157.5 140.7 122.0 109.8 100.0
Net income (loss) 213.3 (36.7) 206.4 133.6 100.0
Calculation notes:
1. The base year trend percentage is always 100.0%. A trend percentage of less than
100.0% means the balance has decreased below the base year level in that particular year. A trend
percentage greater than 100.0% means the balance in that year has increased over the base year. A
negative trend percentage represents a negative number.
2. If the base year is zero or negative, the trend percentage calculated will not be
meaningful.
In this example, the sales have increased 59.3% over the five-year period while the cost of goods sold has
increased only 55.9% and the operating expenses have increased only 57.5%. The trends look different if
evaluated after four years. At the end of 20X0, the sales had increased almost 20%, but the cost of goods
sold had increased 31%, and the operating expenses had increased almost 41%. These 20X0 trend
percentages reflect an unfavorable impact on net income because costs increased at a faster rate than
sales. The trend percentages for net income appear to be higher because the base year amount is much
smaller than the other balances.
Read more: http://www.cliffsnotes.com/study_guide/Trend-Analysis.topicArticleId-21248,articleId-
21211.html#ixzz0wZwc4UNX