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Trendlines in charts
A trend line is a straight line connecting multiple points on a chart. A trend is a movement in a particular direction The magnitude of the slope of a trend line, or steepness, indicates the strength of the trend. Trendlines can be used to forecast future !
Select the graph and right click Select add Trend line
Trendline types
A window opens with types of trend line to select from 6 Options Select the default option for trend line Linear Click OK
Trendline
Formatting trendline
Right click on the trend line to format it. Select style, color and weight of your choice
Options - Name
-Trendline Name - You can give custom name for your trendline such as .. Sales trend etc.
Options - Forecast
by using this forecast Option you can extend the trend line forward or backward to the number of periods as desired Here I selected 6 periods (Months - in this case) forward
Options - Forecast
You can Observe that the trendline got extended in to the future by 6 periods This denotes if this trend continues, the sales of XYZ territory are likely to be like this
by clicking display equation on Chart and display r-Squared value on chart, you will be able to display them on the graph Next slide explains them You can Set Intercept to any value by clicking it and adding value (0 is default).
As this Option is not used often in simple trend lines , explanation is beyond the scope of this slide set.
equation
This is the equation generated by excel that holds the mathematical relationship of Sales and months. This equation will be unique to each data set This equation can be used to compute sales of any future month to put it simply , here y denotes the sale (which is on Y axis) and x denotes the month So lets compute 13th month (Jan-2011 in this case) projection, using this equation y= ((17.311)*13)+296.39 that equals 521.43 So the likely sales projection for 13th month is 521.43
R squared Value
This is the R_squared Value for this trendline. This value denotes the reliability of the sales projections. R squared value will range between 0 and 1 If the R squared value is 1, then the trend is most predictable and reliable. The reliability of trendline goes up if the Rsquared value is nearest to 1 Let us see the next example to understand it better.
R squared Value = 1
Here the R_squared Value is 1. Just take a look at the sales progress. With every passing month, this territory is adding $100 to the previous month. So, going by the trend, you can be almost sure, that the 13th month sales are . Remember, Trend lines and Forecasts means you are presuming the existing market conditions are not going to change radically.
1. 2. 3. 4. 5. 6.
6. Moving average trendline : Use it when uneven fluctuations are in data values
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