# index factor

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what's index factor?:confused1:
how to work out the index factor? thanks

• Registered, Moderator Posts: 2,034 mod
When you study time series analysis and moving averages you will often go ahead and look at forecasting from a trend.
Invariably the process involves two activities to start with and then you can work out the forecast.
One of the activities is to continue (or extrapolate) the trend into the future, the other is to find the seasonal variation.
Very often you will use an additive (or absolute) seasonal difference by finding the sales that actually took place less the trend value. We tend to call this the seasonal variation.
The alternative approach has many names, one is the multiplicative seasonal difference. Here the actual sales for each quarter is divided by the trend value. This produces the index factor (something like 0.86 or 1.14)
You would find one of these for each quarter where you have both trend and actual values. Then you look at each quarter and if you have more than one index factor for say quarter 1 you would calculate an average.

Once you have an index factor for say quarter 1, you would use it to forecast. If you are looking at quarter 1 of 2010 then the sales forecast would be the trend for that period multiplied by the index factor.

Where have you come across this? Reports and returns?
Sandy
sandy@sandyhood.com
www.sandyhood.com
• Registered Posts: 585 Epic contributor 🐘
came across this

see if it any useful to you

• Registered, Moderator Posts: 2,034 mod