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,…
LinkedIn Learning (Lynda.com) is a PMI Registered Education Provider. This course qualifies for professional development units (PDUs). To view the activity and PDU details for this course, click here.
The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
- 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.