Budgeting - Again !

uknitty

Looks like lots of us are studying budgeting right now ! I've just come to do my second assignmnet for Premier Training and I am a bit stumped by one of the questions.

I am given the actual turnover and the seasonal adjustment. The first part of the quesiton asks me to calculate the Turnover Trend. I've done this and included my answers in the table below.

The row I am struggling to complete is "Growth". My understanding is growth relates to the increase (or decrease) in the trend from period to period. So for the example below turnover grows by 2.5 month on month.

Jan Feb Mar Apr May Jun
Turnover Actual 86 98.5 111 128.5 136 153.5
Seasonal Adjustment -40 -30 -20 -5 0 15

Turnover Trend 126 128.5 131 133.5 136 138.5
Growth

Please could someone explain how would you calculate the figures for the "growth" row in the above example ?


ETA no idea how to actually format the above so it stays in colums - when I am typing it all looks neat then I hit "post" and it all gets bunched up - how annoying !

rekha0303

Hiya,

Growth =Turnover Actual - Seasonal Adjustment

Therefore

Jan = 86- -40 = 86+40 = 126 (remember - - becomes + )

Feb = 98.5 - -30 = 98.5 + 30 = 128.5 ( remember - - becomes + )

March = 111 - -20 = 111 +20 = 131 ( remember - - becomes + )

April - 128.5 - -5 = 128.5 + 5 = 133.5 (remember - - becomes + )

May = 136 - 0 = 136

June = 153.5 - 15 = 138.5

Hopes this helps!

Cheers

Rekha


Jan Feb Mar Apr May Jun
Turnover Actual 86 98.5 111 128.5 136 153.5
Seasonal Adjustment -40 -30 -20 -5 0 15

Turnover Trend Growth 126 128.5 131 133.5 136 138.5

uknitty

Hi there Rekha

Thanks for your reply.

I've already got that far with the question (calculating the monthly trend by removing the effect of seasonal adjustments)

The part I can't do is the monthly growth.

The only answer I can come up with is to put 2.5 in the growth column for each month because that is the incremental increase month on month ?

Any thoughts about what figure should go on this line ?

rekha0303

Hiya,

Correction on my previous reply:

Trend (not Grwoth) =Turnover Actual - Seasonal Adjustment

Well I believe my answer for growth would be same as yours ,ie, 2.5 each month.

What's the answer in the book for this?

uknitty

No book answer because this is an online assignment.

Growth to me is the increase from one period to the next so thats why I would put 2.5.

I guess I'll find out soon !

SandyHood

uknitty
The growth is 2.5, so if it is a straight line rate of growth, the future trend will grow by 2.5 each period.

Questions often state that the trend will grow at the same rate into the future, and that the seasonal variations of the past are expected to be repeated in the future.

You were right, I hope I can reassure you.