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Trend analysis is a form of analysing financial data and it is expressed as percentage for each year. It helps the accounting user in evaluating financial performance of the business and also form opinion of various tendencies by which businesses can predict future trends.
Importance of trend analysis:
1. Predicting of the trends of business which is forecasting of future trends in business.
2. Trends are expressed as percentages which is less time consuming and easy to follow.
3. It becomes a popular financial analysis method due to trends being expressed in percentages which makes evaluating financial performance and operating efficiency of the firm relatively simpler.
4. It presents a broader picture of the performance of company in terms of finance, viability and efficiency.