Trend Analysis and Limitation
Trend analysis is the process of information collection and trying to identify a pattern that has been presented. A critical gain that arises from trend analysis is forecasting and making predictions of the future. The design and pattern that has been identified in the current data and information if effective in depicting what is anticipated in the days to come. A critical limitation that arises from the use of trend analysis is the accuracy. Some changes take place more often in the pattern, making it a challenge to predict the future. In such instances, there will be a challenge since the analysis outcomes are less likely to be accurate, and there will be a decline in the probability of occurrence. In finance, decision trend analysis is very crucial to the experts and professionals in the sector. The main contribution is to make a more informed decision and reduce the risks associated with an outcome. With trend analysis, it is possible to evaluate the expected risk, resulting in the creation of an action at the moment, which will act as a contingency play. Also, the relevance of trend analysis in finance is depicted in the planning decision. It is possible to create a strategy that will lead to the attainment of the set goals and objectives as stipulated in the trend analysis.
Financial Trends for JC Penny
An evaluation and analysis of JC Penny’s past data indicate a decline in the revenue generated from 2015 to 2020. There was a slight increase in 2010, but it is an issue for concern since a downward slope is more consistent. Revenue will determine the amount of profit in an organization after all the expenses have been deducted. The declining revenue value for JC Penny in the last years is attributed to the trend depicted in the decreasing amount of profits being generated. There is a downward fluctuation, and it should be a worrying concern to the company’s management. Another trend that has been depicted from the analysis is a decrease in the number of sales over the last five years while there is a constant increase in the cost and expenses. Salaries and wages appear to be the most entry in the books of accounts that contributed to the increasing expenses. There is an upward slope on the expense and a downward gradient on the sales. The connection between the various variables incorporated in the books of accounts makes it challenging for JC Penny to realize any profits at the end. The trend analysis indicates the sectors of their operations that need some improvement and attributed to the challenges encountered at the moment. The 2015 financial year marks the exact point where JC Penny started to experience a decline in profits, as depicted by the trend analysis.
Forecasting
One of the forecasting models in trend analysis under which it will be possible to depict the needed financial stability is time series analysis. The primary variable in the framework is the time that will be used to predict some of the changes taking place within a specified duration. The reason for designing the model is because it will mainly focus on historical data. Therefore, it will be easy to show the financial stability by depicting the organization’s position in the past, the milestones that have been made to attain the current position, and the decision that needs to be made to move to the following aims and objectives. Visualization of data patterns using the design is easy since everything is clearly in graphical representations. Also, it will be appropriate and recommendable to take advantage of the model because it will be easy to show the relationship between hours, days, weeks, months, and years. An individual can slowly make a follow-up if progress has been made and the realization of a defect is straightforward. Interpretation of the information presented in the model will make it easy to resonate and predict the future outcomes based on the data gathered at the moment and in the future. Estimation is essential for any forecasting model. The level of accuracy for the prediction depends on the variables that have been incorporated in the design. The level of effectiveness and efficiency for the proposed time series forecasting model is high and more applicable in practical life scenarios such as that of JC Penny.
Financial Weakness and Opportunities
A critical financial strength is that it is easy to use and quick. It can be used to analyze a massive amount of data that cannot be effectively analyzed using other approaches. Another gain is that the user interface is excellent. That implies that it can carry out the multivariate analysis where more than two means can be compared. However, there is a disadvantage because the function that can be carried out using the numerical methods can be performed on an excel spreadsheet (Manaswini, 2014). There are limitations to its functionality, and the presentation of the outcomes of analysis is challenging. It will be necessary to use more than a single approach to analyze data and information in project management. That is because the focus will be on improving the accuracy level of the outcomes and making sure that the prediction is on point. It will be easy to identify the associated risk and implement a contingency plan that will be effective and efficient at the same time.
Recommendation
Technological advancement has predicted the future to be easy. However, in most instances, the prediction is just but an estimate of the values and outcomes which are anticipated. However, trends in the future are more likely to be accurate. It will no longer be the rage but the actual value that can assist with the evaluation of gains at the moment. There is a high chance that the JC Penny organization will be strengthened by implementing the suitable approaches and strategies used in trend analysis. The recommendation is to adopt the time series forecasting model since it will serve their needs. There will be a high chance to make the correct prediction of the future outcomes for action to be taken at the moment. However, for JC Penny, the focus is more on the past, where a primary intention is to realize what went wrong in their profit generation and some of the remedies that can be used. The recommendation is likely to be effective since it will depict the point when the company had a declining shift in its profits. More so, the data and information obtained from the approach will be more than just what had happened in the past and predict what needs to be done to create the needed change.
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