Trend analysis
In one sentenceFollowing a financial item or ratio over several years relative to a base year, to see its overall direction rather than its change in a single year.
Simply put
You choose a base year and set its value at 100, then divide each later year's value by the base year's value. The resulting figures (indices) show the direction clearly: steady rise, fluctuation, or decline.
A single year can mislead you with an exceptional situation, while three or five years give you a truer picture on which to build your next budget.
Worked example
A restaurant sold 800,000 SAR in 2023, then 920,000 in 2024, then 1,040,000 in 2025, then 1,200,000 SAR in 2026. The base year is 2023.
2024 = 920,000 ÷ 800,000 × 100115
2025 = 1,040,000 ÷ 800,000 × 100130
2026 = 1,200,000 ÷ 800,000 × 100150
Sales in 2026 compared with the base year+50%
Formula: Year value ÷ base year value × 100
Don't confuse it with
Horizontal analysisHorizontal analysis compares two consecutive years, while trend analysis relates many years to a single base year.
in FullScreen ERP
Unlimited fiscal years let you compare performance between years. General accounts