CHAPTER – 3

STATISICAL ANALYSIS

Trend Analysis
Trend analysis is a technique used in technical analysis that attempts to predict the future
stock price movements based on recently observed trend data. Trend analysis is based on the idea
that what has happened in the past gives traders an idea of what will happen in the future. Trend is
the widespread practice of collecting information and attempting to spot a pattern. In some fields
of study, the term “trend analysis” has more formally defined Meanings.

A trend is the general direction the market is taking during a specified period of time. Trends can
be both upward and downward, relating to bullish and bearish markets, respectively. While there is
no specified minimum amount of time required for a direction to be considered a trend, the longer
the direction is maintained, the more notable the trend.

Although trend analysis is often used to predict future events, it could be used to estimate uncertain
events in the past, such as how many ancient kings probably ruled between two dates, based on
data such as the average years which other known kings reigned. Trend analysis is the process of
trying to look at current trends in order to predict future ones and is considered a form of
comparative analysis. This can include attempting to determine whether a current market trend,
such as gains in a particular market sector, is likely to continue, as well as whether a trend in one
market area could result in a trend in another

1. SALES TREND:

Sales trend analysis is the review of historical revenue results to detect patterns. It is a
useful budgeting and financial analysis method that can indicate the onset of changes in the near-
term revenue growth rates of a business. It is rarely adequate to simply plot the total sales of a
business on a trend line and expect to obtain any significant information from it. Most
organizations sell many products to a variety of customers, and in many regions, which means that
sales can be broken down into a number of sub-groups and then reviewed on a trend line.
 Table showing the Sales Trend

SALES TREND

NET TREND
YEAR X X2 XY
SALE VALUE

2018 235,551.76 -2 4 -4,71,103.52 244139.31

2019 296,036.97 -1 1 -296036.97 262801.91
2020 283,195.63 0 0 0 281484.516
2021 231,509.86 1 1 231509.86 300127.11
2022 361,128.36 2 4 722256.72 318789.71
N=5 1407322.58 0 10 186626.09 1407322.58

Y = a + bx
a= ∑y/n = 1407322.58/5 = 281484.516
b = ∑xy /∑x2 = 186626.09/ 10 = 18662.609

2018:
Y = 281484.516 + 18662.609 (-2) = 244139.31

2019:
Y = 281484.516 + 18662.609 (-1) = 262801.91

2020:
Y = 281484.516 + 18662.609 (0) = 281484.516

2021:
Y = 281484.516 + 18662.609 (1) = 300127.11

2022:
Y = 281484.516 + 18662.609 (2) = 318789.71
Prediction:
2023:
Y = 281484.516 + 18662.609 (3) = 337472.34

2024:
Y = 281484.516 + 18662.609 (4) = 356134.95

Chart showing the Sales Trend

Sales Trend Analysis

400,000.00
361,128.36
350,000.00 318789.71
296,036.97 300127.11
300,000.00 283,195.63
262801.91
235,551.76 281464.51
250,000.00 244139.31 231,509.86

200,000.00

150,000.00

100,000.00

50,000.00

0.00
2018 2019 2020 2021 2022

NET SALE TREND VALUE

Interpretation:
The above date shows the sales trend analysis from the year 2018 to 2022. In the year 2018 the
balance is 244139.31 and in the upcoming years the sales gradually increases and in the year 2022
it increases to 318789.71. In the year 2023 and 2024 the sales is expected to be 337472.34 and
356134.95. In the upcoming year it may increase gradually.
2. NET PROFIT TREND:

A profitability trend is the evolution of profit within a business. An upward trend means
that profit has generally increased over time in the short or long run. A downward profitability
trend means profits are declining.
Table showing Net Profit Trend

NET PROFIT TREND

NET
YEAR TREND
PROFIT X X2 XY
(x) VALUE
(Y)
2018 7,976.30 -2 4 -15952.6 6417.48
2019 7,132.02 -1 1 -7132.02 7770.97
2020 2,683.19 0 0 0 9124.38
2021 19,041.67 1 1 19041.67 10477.79
2022 8,788.73 2 4 17577.46 11831.28
N=5 45621.91 0 10 13534.51 45621.9

Y = a + bx
a= ∑y/n = 45621.91/5 = 9124.382
b = ∑xy /∑x2 = 13534.51/10 = 1353.451

2018:
Y = 9124.38 + 1353.451 (-2) = 6417.48

2019:
Y = 9124.38 + 1353.451 (-1) = 7770.97

2020:
Y = 9124.38 + 1353.451 (0) = 9124.38
2021:
Y = 9124.38 + 1353.451 (1) = 10477.79

2022:
Y = 9124.38 + 1353.451 (2) = 11831.28

Prediction:
2023:
Y = 9124.38 + 1353.451 (3) = 13184.73

2024:
Y = 9124.38 + 1353.451 (4) = 14538.18

Chart showing Net Profit Trend

Net Profit Trend

20,000.00 19,041.67
18,000.00
16,000.00
14,000.00
11831.28
12,000.00 7770.97 10477.79
10,000.00 9124.38 8,788.73
7,976.30
8,000.00 6417.48
6,000.00 7,132.02
4,000.00 2,683.19
2,000.00
0.00
2018 2019 2020 2021 2022

NET PROFIT (Y) TREND VALUE

Interpretation:
The above date shows the net profit trend analysis from the year 2018 to 2022. In the year
2018 the balance is 6417.48 and in the upcoming years the sales gradually increases and in the
year 2022 it increases to 10477.79. In the year 2023 and 2024 the sales is expected to be 13184.73
and 14538.18. In the upcoming year it may increase gradually.
3. DIVIDEND TREND:

The Dividend trend measures the percentage of net income that is distributed to shareholders
in the form of dividend during the year. In other words, this ratio shows the portion of profits the
company decides to keep funding operations and the portion of profits that is given to its
shareholders.
Table showing Dividend Trend

DIVIDEND TREND

YEAR(x DIVIDEND(y TREND

X X2 XY
) ) VALUE

2018 2,884.76 -2 4 5769.52 -2563.35

2019 3,540.39 -1 1 3540.39 1773.36
2020 4,818.86 0 0 0 6110.07
2021 4,555.43 1 1 4555.43 10446.78
2022 14,750.92 2 4 29501.84 14783.49
N=5 30550.36 0 10 43367.18 30550.35

Y = a + bx
a= ∑y/n = 30,550.36/5 = 6110.07
b = ∑xy /∑x2 = 43367.18/10 = 4336.72

2018:
Y = 6110.07 + 4336.72 (-2) = -2563.35

2019:
Y = 6110.07 + 4336.72 (-1) = 1773.36

2020:
Y = 6110.07 + 4336.72 (0) = 6110.07
2021:
Y = 6110.07 + 4336.72 (1) = 10446.78

2022:
Y = 6110.07 + 4336.72 (2) = 14783.49

Prediction
2023:
Y = 6110.07 + 4336.72 (3) = 19120.23

2024:
Y = 6110.07 + 4336.72 (4) = 23456.95

Chart showing Dividend Trend

DIVIDEND TREND
16,000.00 14,750.92
14783.49
14,000.00
12,000.00 10446.78
10,000.00
8,000.00
6110.07
6,000.00 4,555.43
3,540.39
4,000.00 2,884.76
4,818.86
2,000.00
1773.36
0.00
-2563.35
-2,000.00
-4,000.00
2018 2019 2020 2021 2022

DIVIDEND TREND VALUE

 Interpretation:
The above date shows the dividend trend analysis from the year 2018 to 2022. In the year
2018 the balance is -2563.35 and in the upcoming years the sales gradually increases and in the
year 2022 it increases to 14783.49. In the year 2023 and 2024 the sales is expected to be 19120.23
and 23456.95. In the upcoming year it may increase gradually.

4. WORKING CAPITAL

Working Capital trend reports are considered important liquidity analysis tools and are often used
by CFOs and analysts to determine the company’s ability to pay for short term obligations.

Table showing Working Capital Trend

WORKING CAPITAL TREND

WORKING
YEAR TREND
CAPITAL X X2 XY
(x) VALUE
(Y)
201
-7714.86 -2 4 15429.72 -20019.27
8
201
-604.41 -1 1 604.41 -14728.59
9
202
-17941.55 0 0 0 -9377.91
0
202
-3782.82 1 1 3782.82 -4027.23
1
202
-16845.93 2 4 33691.86 1323.45
2
N=5 -46889.57 0 10 53506.81 -46829.55

Y = a + bx
a = ∑y/n = -46889.57 / 5 = -9377.91
b = ∑xy /∑x2 = 53506.81 / 10 = 5350.68

2018:
Y = -9377.91 + 5350.68 (-2) = -20019.2
2019:
Y = -9377.91 + 5350.68 (-1) = -14728.59

2020:
Y = -9377.91 + 5350.68 (0) = -9377.91

2021:
Y = -9377.91 + 5350.68 (1) = 4027.23

2022:
Y = -9377.91 + 5350.68 (2) = 1323.45

Prediction
2023:
Y = -9377.91 + 5350.68 (3) = 25429.95

2024:
Y = -9377.91 + 5350.68 (4) = 30780.63
Chart showing Working Capital Trend
 WORKING CAPITAL TREND
5000
1323.45
-604.41 0
0
-3782.82
-5000 -7714.86
-9377.91
-10000
-14728.59
-15000 -16845.93
-17941.55
-20019.27
-20000

-25000
2018 2019 2020 2021 2022

WORKING CAPITAL (Y) TREND VALUE

Interpretation:
The above date shows the working capital trend analysis from the year 2018 to 2022. In the year
2018 the balance is -20019.2 and in the upcoming years the sales gradually increases and in the
year 2022 it increases to 1323.45. In the year 2023 and 2024 the sales is expected to be 25429.95
and 30780.63. In the upcoming year it may increase gradually.

5. NETWORTH TREND:

Net worth is the value of all the non-financial and financial assets owned by an individual
or institution minus the value of all its outstanding liabilities. Since financial assets minus
outstanding liabilities equal net financial assets, net worth can also be conveniently expressed as
non-financial assets plus net financial assets.
Table showing Networth Trend

NET WORTH TREND

NET
YEAR TREND
WORTH X X2 XY
(x) VALUE
(Y)
2018 34,131.49 -2 4 -68262.98 31870.89
 2019 36,737.68 -1 1 -36737.68 36765.23
2020 33,214.38 0 0 0 41659.57
2021 54,544.55 1 1 54544.55 46553.91
2022 49,669.78 2 4 99399.56 51448.25
N=5 208297.88 0 10 48943.45 208297.88

Y = a + bx
a = ∑y/n = 208297.88/5 = 41659.58
b = ∑xy /∑x2 = 48943.45/10 = 4894.34

2018:
Y = 41659.58 + 4894.34 (-2) = 31870.89
2019:
Y = 41659.58 + 4894.34 (-1) = 36765.23

2020:
Y = 41659.58 + 4894.34 (0) = 41659.57

2021:
Y = 41659.58 + 4894.34 (1) = 46553.91

2022:
Y = 41659.58 + 4894.34 (2) = 51448.25

Prediction
2023:
Y = 41659.58 + 4894.34 (3) = 56,342.6

2024:
Y = 41659.58 + 4894.34 (4) = 61,236.94
 Chart showing Networth Trend

Networth Trend
60,000.00 54,544.55
51448.25
50,000.00
41659.57
49,669.78
40,000.00 34,131.49 36,737.68 46553.91

30,000.00 36765.23
31870.89 33,214.38
20,000.00

10,000.00

0.00
2018 2019 2020 2021 2022

Interpretation: NET WORTH (Y) TREND VALUE

The above date shows the networth trend analysis from the year 2018 to 2022. In the year 2018 the
balance is 31870.89 and in the upcoming years the sales gradually increases and in the year 2022 it
increases to 51448.25. In the year 2023 and 2024 the sales is expected to be 56,342.6 and
61,236.94. In the upcoming year it may increase gradually.