Chapter 2 - Statistical Techniques

Question 1

What is an index and how is it created?

Answer 1

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

Question 2

What is the formula to restate a figure?

Answer 2

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

Question 3

What is the formula to forecast figures using index numbers?

Answer 3

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

Question 4

Using multiple indices

Answer 4

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

Question 5

Trend analysis

Answer 5

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

Question 6

How is the average trend calculated?

Answer 6

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