TREND ANALYSIS
Trend Analysis means comparison of
past data over a period of time with a base year. It helps to analyze the
financial statements and measure the percentage change of a particular item
over a period of time. It tells about
the increase or decrease of the particular item when compared to base year. It
helps investors or evaluator to predict the trend based on the past available
data for investments or future planning.
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Major takeaway from Trend Analysis are
as follows,
§ In helps the investor to predict the trend in the market based on
past data.
§ It is based on idea that the future trends will be based on the
past data or trends.
§ It focuses on short-term, long term as well as intermediate term
too.
There are few limitations of trend analysis such as
§ It is not necessary that history repeats.
§ We can also see that the prices are already available in the market
based on market efficiency so it may not be advisable to see the past trend as
many factors influences the trends.
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