Trend analysis when trend is NOT constant

Oniyama100 Registered Posts: 7 New contributor 🐸
Hi there, I am studying trend analysis for Cash and Treasury Management, AAT Level 4, (although trend analysis features throughout the professional qualification).

I have come across a question in the Kaplan text regarding the extrapolation of a trend when the trend is NOT constant.

The way to calculate this is given as:

Average trend = (last known trend - first known trend) / (number of sets of data -1)

Can anyone tell me why there is a -1 at the end here?

I have attached the picture of the question containing the data set used, this covers 12 months, so the calculation gives 12-1, giving a data set of 11.

I am confused, I hope someone knows why this is.

I appreciate ANY help possible.

Privacy Policy