In addition for a valid analysis it will be necessary

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performing a time-series analysis is using a financial ratio analysis. In addition, for a valid analysis it will be necessary to calculate at least two years of ratios[Fin181]. Comparing several years of financial ratios is what gives you the time-series analysis [Acc183]. Advantages of using a time-series analysis are realized because verifiable data is used, it can be exposed to detailed analysis for proof. It is considered more “exacting” due to the use of numbers [Met18], it can be “replicated, checked, updated and refined as necessary” [Met18]. There are also drawbacks to this type of analysis. Past data may not give a accurate depiction of an underlying trend. An example of this might be catastrophic events that may impact normal business trends [Met18]. Turning points may also be difficult to predict, they may appear as “mere aberrations or the beginning of a new trend” [Met18]. Finally, long-term estimates need additional data to back them, but may not always be obtainable, especially for a new business or
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product line [Met18]. This is an analysis I find useful and include in my financial summaries at month-end. References Accounting Tools. (2018, October 11). Financial Statement Analysis . Retrieved from Accounting Tools: Financial Statemet Analysis . (2018, October 11). Retrieved from - Financial-statement-analysis.pdf Metcalf, T. (2018, October 11). The Pros & Cons of Trend Analysis in Forecasting . Retrieved from Chron: Veenstra, J. P. (2018, October 11). Time Series & Statistical Machine Learning, University of Westeren Ontario 2013 . Retrieved from Quora: - What-are-its-advantages-and-disadvantages# Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate Accounting: Reporting and Analysis. Boston: Cengage Learning.
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  • Fall '16
  • Professor Karen Smith
  • Statistics, Financial Ratio, Cengage Learning, Time series analysis, Trend estimation

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