Learn how to use the naive approach to approximate trends across a time series in Microsoft Excel. Additionally, learn how to make assumptions about future growth based on these trends.
- [Instructor] There are several quick ways…to forecast using past data.…One of the simplest is called the Naive Approach.…You can imagine with a name like that,…it's fairly uncomplicated, but it does give you…a high level idea of potential future trends.…In naive forecasting, you use the previous periods' actuals…to forecast for the upcoming period…without making any adjustments.…This process is only legitimate for time series data,…so chronological data, in which you assume that…this financial period will be identical to the previous.…
Let's just dive right in and look at some data.…I'm working out of Exercise File 02_01_Begin.…In this file, you'll see that there's several rows…of data organized by financial period.…In this case, we're using one month as a financial period.…You'll see that it'll be different for different businesses.…I've given sales data for a sporting goods store…by month for about two and a half years.…We're going to estimate the last month's revenue…using naive approach, so as you can see,…
- Explain the four different types of financial statements.
- Distinguish between the types of moving averages.
- Determine a seasonal adjusted trend.
- Break down pro-forma financial statements.
- Identify cash flows, and what increased liabilities and decreased earnings generally indicate.
- Tell what a regression is.
- Outline the naive approach.
Skill Level Intermediate
Finance Foundations: Business Valuationwith Jim Stice1h 39m Intermediate
1. Finance Basics
2. Simple Financial Forecasting
3. Pro Forma Financial Statements
4. Projecting Cash Flows
5. Introduction to Regression Analysis
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