Question

Santa Claus is trying to forecast demand for coal this Christmas. For the past 300 years, the numberof naughty children (who will get coal in their stockings) has increased by 3% each year. Santa is likely to use the ____________ method to forecast demand.Select onea. Sales force surveyb. Trend analysisc. Chain ratiod. Lost elf methode. Market Factor Analysis

Answer 1

Answer:

The correct answer is B. Trend analysis.

Explanation:

The trend analysis is the method of analysis that consists in observing the behavior of the different items of the Balance Sheet and the Income Statement, to detect some significant changes that may have their origin in administrative errors.

This method allows us to know the direction and speed of the changes that have occurred in the financial situation of the company over time, so it is considered as a method of horizontal analysis.

It helps us to detect failures; but it is only an exploratory method, so it is always necessary to investigate further to find the causes of the failures. It is necessary to determine the changes suffered in the balances of the financial statement items that we are interested in analyzing. The trend analysis allows us to know the financial development of a company.