What is an index and how is it created?

An index measures the average change in value of a group of items. This can be either values or quantities.

(Current period’s figure / Base period’s figure) x 100

What is the formula to restate a figure?

(Index for base period / Index for current period) x current figure

What is the formula to forecast figures using index numbers?

(Index for period converting TO / Index for period converting FROM) x historical figure

Using multiple indices

Use the quantity index to forecast and then apply the price index.

Trend analysis

Step 1

Identify the time periods ie three or four point moving average

Step 2

Calculate the averages

Step 3

Calculate any seasonal variations

Step 4

Use the trend and seasonal variations to forecast future figures

How is the average trend calculated?

Take the difference between the first and last figures of the trend and divide by the number of periods less 1