Overview

Many businesses are affected by seasonal demand changes. They cause their revenues, expenses, inventory and resource requirements change through the year.

It is therefore critical to understand seasonality of your business in order to make accurate plans and budgets.

This publication contains a set of very practical tools to analyze seasonal fluctuations. They are accompanied by detailed explanations and professionally designed charts to help communicate the outcomes. The tools can be used for in-house analysis, management or shareholder reports, due diligence or consulting assignments.

These tools explain how to:

  • Identify and quantify seasonal changes and visualize seasonal patterns on the charts. This includes multiple correlation analysis to determine how strong seasonality is.
  • Track current year-to-date sales (of different products) and compare them visually against historic ranges
  • Remove the effect of seasonality from the numbers in the right way
  • In the opposite case, apply seasonal indices to forecasted numbers
  • Understand the company's performance relative to normal seasonal variation
  • Build forecasts taking into account seasonality patterns

The methods provided in this publication are equally applicable to sales, expenses, balance sheet items and physical measurements.

The publication also demonstrates how to properly build trend forecasts based on historic data and explains why commonly used CAGR rarely gives reliable future estimates.

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