Microsoft Office Tutorials and References
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What’s in the Future: Using FORECAST, TREND, and GROWTH to Make Predictions
What’s in the Future: Using FORECAST,
TREND, and GROWTH
to Make Predictions
The FORECAST function does just what its name suggests — it forecasts
an unknown data value based on existing, known data values. The function
is based on a single important assumption — that the data is linear. What
exactly does this mean?
FORECAST
The data that FORECAST works with are in pairs — there’s an X value and a
corresponding Y value in each pair. For example, perhaps you’re
investigating the relationship between people’s heights and their weight. Each data
pair would be one person’s height, the X value, and their weight, the Y value.
Many kinds of data are in this form — sales by month, for example, or income
as a function of educational level.
You can use the CORREL function to determine the degree of linear
relationship between two sets of data. See Chapter 9 to find out about the CORREL
function.
To use the FORECAST function, you must have a set of X-Y data pairs. You
then provide a new X value, and the function returns the Y value that would
be associated with that X value based on the known data. The function takes
three arguments:
The first argument is the X value that you want a forecast for.
The second argument is a range containing the known Y values.
The third argument is a range containing the known X values.
Note that the X and Y ranges must have the same number of values or the
function returns an error. The X and Y values in these ranges are assumed to
be paired in order.
Don’t use FORECAST with data that isn’t linear. Doing so produces inaccurate
results.
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