- 25 Marks
QMDM – JULY 2020 – L2 – Q3 – Time Series Analysis on Bad Debts
Calculate moving average trend for bad debts, plot histogram with trend, discuss micro/macro factors in sales/profit forecasting, and factors for new product sales forecasting.
Question
A bank had to write off the following bad debts for the years 1990 – 1996 inclusive.
| Year | Amount of bad debts (GHe’000) |
|---|---|
| 1990 | 360 |
| 1991 | 390 |
| 1992 | 440 |
| 1993 | 500 |
| 1994 | 560 |
| 1995 | 600 |
| 1996 | 650 |
(a) Find the trend using the method of moving average. (10 marks)
(b) Using the data above, plot a histogram showing the trend line calculated in (a) above. (5 marks)
(c) Accurate bank sales and profit forecasting requires careful analysis of a bank’s specific and broader influences. Discuss some of the micro and macro economic factors a bank must analyse in its sales and profit forecasting. (5 marks)
(d) Forecasting the success of new product in the banking industry is notoriously difficult. Describe some of the macroeconomic and microeconomic factors that a bank might consider in forecasting sales for new products. (5 marks)
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