The Trend Analysis in Business

Enterprises often keep their data records and use them for prediction and pattern identification. Trend analysis is primarily used to compare a company’s results over a period, typically three to ten years. It is used to identify patterns and changes in the same organization for the desired duration (Burnley, 2022). For example, an analyst can choose to examine the sales data over a seven-year period to establish whether there is an increase, decrease, or stability of products sold. The other example is examining the expenses in a balance sheet to check if there is unusual expenditure for the reporting period. It differs from ratio analysis which focuses on analyzing various items within the same firm to know how they relate (Burnley, 2022). It is primarily utilized in gauging the performance of several goods from the financial statement. For instance, a retailer may compare solar and electric heater sales to know the one with more revenue.

The trend analysis provides evidence that helps managers and business owners make relevant decisions. The findings can reveal areas of underperformance that aid in making decisions for positive change (Burnley, 2022). Moreover, trend analysis helps predict the future performance of the organization if everything remains constant. The forecast is further useful in informing the management on ways they can have a better return, shift to a new product line, or continue with the same strategy if the future is promising. Thus, the trend analysis ensures that the company takes control of the future instead of assuming.


Burnley, C. D. (2022). Understanding financial accounting. John Wiley & Sons.

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