Trend analysis is a statistical process performed to examine hypothesized linear and nonlinear relationships between two quantitative variables. Trend analysis methods can be used to examine and analyze a process, especially non-manufacturing processes like nonconformances, complaints, and deviations to aid in the decisions for corrective and preventive action (CAPA). Trend analysis methods can also help an organization to focus on the company’s limited resources, where they are needed the most. Like traditional control charts that are used for monitoring a manufacturing or production process, trend analysis charts are usually designed using alert limits, threshold limits, or action limits. When any one of these limits exceeds, it triggers an investigation to determine if further actions are required. With the help of experts, we at Infiniti, have come up with the following trend analysis methods to help your businesses to grow:
Trend Analysis Methods
Geographic trend analysis
Geographic trend analysis is one of the most reliable and easiest trend analysis methods. This is performed by visiting a country, region, or city to identify the particular trend going on there and try to predict the rate at which it can progress in the future.
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Temporal trend analysis
Temporal trend analysis is one of the trend analysis methods that allow analysts to study and model the behavior of a variable in a data set over a period of time. This is one of the trend analysis methods that is considered to be tricky for novices. This method can be a little misleading if it is applied to random activities or if a critical factor is left out.
Intuitive trend analysis
This is one of the most common trend analysis methods. It relies heavily on the ability of analysts to process and understand all the information about a topic and predict its outcome. These methods are extremely difficult to execute effectively because there are numerous external factors that shape the outcome.
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Importance of Trend Analysis
#1. Helps in inter-firm comparison
Trend analysis methods help analysts to make suitable comparisons between two or more firms over a period of time. It also helps understand the strengths or weaknesses of a particular organization in comparison with other related organizations in the industry.
#2. Helps to measure liquidity and solvency
Trend analysis methods, with the help of financial trend ratios, help the analyst to understand the short-term liquidity position as well as the long-term solvency position of a company over the years.
#3. Measuring profitability position
Trend analysis methods with the help of some related financial trend ratios like Net Profit Ratio, Operating Ratio, Gross Profit Ratio, etc. also helps to measure the profitability position of a firm over the years.
Trend Analysis: Steps to follow
In this article, the industry experts at Infiniti Research highlight a few ways to perform trend analysis and determine the future objectives of the products or services of any business:
- Identify trends in customer requirements and behavior
- Study the shifts in consumer perception of value
- Study trends in industry cost drivers
- Study evolution and change of the industry
Contact us to know more about the trend analysis methods and how it helps in business growth.
