Forecasting Using Indices

In: Business and Management

Submitted By texanbrat
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Pages 3
Forecasting Using Indices
Tricia Thedford
QRB 501/Quantitative Reasoning for Business
March 4, 2012
Vinata Kulkarni, PhD

Forecasting using indices
Forecasting is an integral part of business. Forecasting allows investors to see anticipated growth/decline in a business. An accurate forecast will also allow a business to respond appropriately should a problem be evident in the desired business plan. Forecasting can be done on all data within a financial statement or can target specific areas, depending on the information desired. Investors as well as business executives have a need to see where a company is headed when making future business decisions.
The dictionary defines the word forecast as “to anticipate, calculate, or predict (some future event or condition) usually as a result of rational study and analysis of available pertinent data” (Merriam-Webster, Inc., 2002, para 2). One should review all data available for making an accurate business forecast. In researching Dell, Inc., inventory history the following data was obtained:

Dell, Inc. historical inventories data | 2011 | 2010 | Period | Amount | Period | Amount | October 31 | 1.40 billion | October 31 | 1.29 billion | July 31 | 1.35 billion | July 31 | 1.37 billion | April 30 | 1.28 billion | April 30 | 1.18 billion | January 31 | 1.30 billion | January 31 | 1.05 billion | 2009 | 2008 | Period | Amount | Period | Amount | October 31 | 952 million | October 31 | 1.11 billion | July 31 | 839 million | July 31 | 1.10 billion | April 30 | 842 million | April 30 | 1.26 billion | January 31 | 867 million | January 31 | 1.10 billion |

Note. Table adapted from data provided by YCharts, copyright 2012.

Using the data above the method of forecasting was to take the average for each period and find the percentage of growth/decline. The percentage multiplied against the…...

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