Santa Claus's Demand Forecasting for Christmas Coal

What method is Santa Claus likely to use to forecast demand for coal this Christmas?

a. Sales force survey
b. Trend analysis
c. Chain ratio
d. Lost elf method
e. Market Factor Analysis

Answer:

The correct answer is B. Trend analysis.

For the past 300 years, the number of naughty children receiving coal in their stockings has increased by 3% each year. In order to forecast the demand for coal this Christmas, Santa Claus is likely to use trend analysis.

Trend analysis is a method of analysis that involves observing the behavior of different items in the financial statements to detect significant changes. It helps in understanding the direction and speed of changes that have occurred over time, making it a form of horizontal analysis.

This method will enable Santa Claus to identify any failures or discrepancies in the demand for coal. However, it is important to note that trend analysis is only an exploratory method. Further investigation is necessary to determine the root causes of any issues detected.

By utilizing trend analysis, Santa Claus will be able to track the financial development of his operations and make informed decisions regarding the demand for coal this Christmas.