Accountancy · Ch 8 — Financial Statement Analysis
Trend Analysis
Trend Analysis
Trend Analysis (Trend Percentages)
A technique in which figures for a series of years (usually three or more) are expressed as a percentage of the figure for a chosen base year, which is itself taken as 100, revealing the direction and pace of change over a longer period than a two-year comparative statement can show.
Trend Percentage = (Figure of the current year ÷ Figure of the base year) × 100
The base year is usually the earliest year in the series available, and every later year's percentage is worked out relative to it — so, unlike a comparative statement (which always compares to the immediately preceding year), a trend percentage always compares back to the same fixed base year, making it possible to see the cumulative movement over several years at a glance.
Worked illustration. A company's Revenue from Operations over three years was: 2022 (base year) ₹8,00,000; 2023 ₹10,00,000; 2024 ₹12,00,000. Calculate the trend percentages.
| Year | Revenue from Operations (₹) | Trend Percentage |
|---|---|---|
| 2022 (base year) | 8,00,000 | 100% |
| 2023 | 10,00,000 | (10,00,000 ÷ 8,00,000) × 100 = 125% |
| 2024 | 12,00,000 | (12,00,000 ÷ 8,00,000) × 100 = 150% |
A technique expressing figures for a series of years as a percentage of a fixed base year (taken as 100), revealing the direction and pace of chan …
The year (usually the earliest in a series) chosen as the fixed reference point, expressed as 100%, against which every other year's trend …