I mark you brainliest if you answer this :) There are four main types of forecasting methods that financial analysts use to predict future revenues, expenses, and capital costs for a business. four main types of forecasting EXPLAIN in your own (1) straight-line (2) moving average (3) simple linear regression, and (4) multiple linear regression.
Answers
Answer:
Straight line
The straight-line method is one of the simplest and easy-to-follow forecasting methods. A financial analyst uses historical figures and trends to predict future revenue growth. ... The first step in straight-line forecasting is to find out the sales growth rate that will be used to calculate future revenues
moving average
A moving average is a technique to get an overall idea of the trends in a data set; it is an average of any subset of numbers. The moving average is extremely useful for forecasting long-term trends. You can calculate it for any period of time. ... Moving averages are usually plotted and are best visualized
Linear regression
Linear Regression Forecast (LRF) Linear regression is a statistical tool used to help predict future values from past values. It is commonly used as a quantitative way to determine the underlying trend and when prices are overextended. ... This linear regression indicator plots the trendline value for each data point
multiple linear regression
Multiple Linear Regression to Forecast Balance of Trade. The main objective of this study is to build a regression model by using multiple linear regression (MLR) analysis. MLR will be used when there are two or more controlled variables involved in the relationship
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Forecasting Methods helps the financial analysts to forecast future revenues, expenses and capital costs of a business.
Explanation:
There are four main types of forecasting methods that financial analysts use to predict future revenues, expenses, and capital costs for a business:-
1. Straight-line Method
The straight-line approach is one of the most basic and straightforward forecasting techniques. To forecast future revenue growth, a financial analyst examines historical data and trends.
2. Moving Average
Moving averages is a refining technique that examines the underlying distribution of a set of data in order to predict future values. The 3-month and 5-month moving averages are the most common. The revenue data should be inserted in the vertical column to create a moving average prediction.
3. Simple Linear Regression
Regression analysis is a frequently used tool for studying and predicting the connection between variables. In this example, we'll use a regression analysis to examine the relationship between radio advertisements and revenue.
4. Multiple Linear Regression
When two or more independent variables are necessary for a projection, a corporation utilizes multiple linear regression to forecast revenues. We conduct a regression on promotion cost, advertising cost, and revenue to know the correlation between them.