Learn how to perform trend analysis in Excel and forecast future values for any variable in six simple steps. Create and evaluate a trendline with Excel.

First, you need to measure how much growth you've achieved so far and decide if you can expect this trend to continue into the future. You'll need to make an educated guess about what the best and worst scenarios could look like. This approach also includes evaluating how well you've prepared for challenges ahead, making sure your expectations are both realistic and achievable. Financial models are quite detailed because they are designed to handle changes; by adjusting the variables in these models, you can explore different financial outcomes, from potential costs to expected gains, or even no results at all. This flexibility is key for effective financial planning in excel.

Please note that if your data is spread over a timeline (dates, or years, etc), it is best to use a XY Scatter Graph, since it will spread the dates appropriately over the timeline, rather than place the intervals equidistant in the graph, which potentially can give you inappropriate trend and forecast.

To forecast future values in Excel, use a trendline on a chart, apply FORECAST.LINEAR() or FORECAST.ETS() functions, or perform regression analysis with the Data Analysis Toolpak for more detailed predictions.

Last updated on Oct 2, 2024

How do you forecast future values based on a trend in Excel?

Trend analysis is a skill that can help you identify patterns and predict future values based on historical data. Excel is a powerful tool that can perform various types of trend analysis, such as linear, exponential, polynomial, or logarithmic. In this article, you will learn how to forecast future values based on a trend in Excel in six simple steps.

1 Choose your data

The first step is to choose your data set that contains the dependent and independent variables. For example, if you want to forecast sales based on time, your dependent variable is sales and your independent variable is time. Make sure your data is organized in columns and rows so that it has no missing or erroneous values.

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Usman Asif

Access 2000+ software engineers in your time zone | Founder & CEO at Devsinc
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First, you need to measure how much growth you've achieved so far and decide if you can expect this trend to continue into the future. You'll need to make an educated guess about what the best and worst scenarios could look like. This approach also includes evaluating how well you've prepared for challenges ahead, making sure your expectations are both realistic and achievable. Financial models are quite detailed because they are designed to handle changes; by adjusting the variables in these models, you can explore different financial outcomes, from potential costs to expected gains, or even no results at all. This flexibility is key for effective financial planning in excel.

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James Albert Silvoza

18k+ Followers • Short Form Editor • Long Form Editor • UGC Editor• VSL Editor • Podcast Editor • Graphic Designer
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To forecast future values in Excel, use a trendline on a chart, apply FORECAST.LINEAR() or FORECAST.ETS() functions, or perform regression analysis with the Data Analysis Toolpak for more detailed predictions.

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📈André Magrini

Director North America - Chief Sales Officer - Chief Revenue Officer - VP Sales-
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Excel is an effective tool for trend analysis and predicting future values. Begin by selecting your dataset, which includes dependent and independent variables. For instance, to forecast sales, sales would be the dependent variable and time the independent. Ensure data is well-organized in columns and rows, and devoid of missing or erroneous values. Utilize Excel's Forecast function or regression analysis for linear trends. For more complex trends, leverage Excel's other functionalities like the Moving Average or Exponential Smoothing. Always scrutinize the resulting forecast and adjust the model as needed. By doing so, Excel can be a powerful tool in forecasting and decision-making.

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2 Insert a chart

The next step is to insert a chart that can display the trend of your data. You can use the recommended charts option in Excel, or choose a specific chart type, such as scatter, line, or column. To insert a chart, select your data range, go to the Insert tab, and click on the chart icon. You can customize your chart by adding titles, labels, legends, and formatting.

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Nilesh Suchdev

Chief Architect & Valuer, Suchdev Associates
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Please note that if your data is spread over a timeline (dates, or years, etc), it is best to use a XY Scatter Graph, since it will spread the dates appropriately over the timeline, rather than place the intervals equidistant in the graph, which potentially can give you inappropriate trend and forecast.

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3 Add a trendline

The third step is to add a trendline that can show the direction and strength of the relationship between your variables. A trendline is a line that best fits your data points, and can be linear, exponential, polynomial, or logarithmic. To add a trendline, right-click on any data point in your chart, and select Add Trendline. You can choose the type of trendline and adjust the options, such as the degree of the polynomial, the intercept, or the display of the equation and the R-squared value.

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4 Forecast future values

The fourth step is to forecast future values based on the trendline equation. The equation shows the relationship between your variables and can be used to calculate the predicted value of the dependent variable for a given value of the independent variable. For example, if your equation is y = 2x + 5, and you want to forecast the value of y when x is 10, you can plug in 10 for x and get y = 25. You can use the formula bar or a cell to enter the equation and the value of the independent variable.

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Matthew (Matt) Markland

Director of Merchandise Planning | Personal Financial Guru | Habit Fanatic
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The most valid forecasts involve dynamic trends. Week to date, month to date, and season to date trends that can be applied to historical, factual outcomes can be updated, in real time, to show the implications of what is happening.

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Rutaba Adnan

Sr. Financial Analyst - Cisco ⚡ FP&A ⚡ Financial Models & Strategy Specialist
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Forecasting future values based on a trend in Excel is like predicting the next move in a game of chess-strategic but straightforward! You can use the FORECAST.LINEAR function or TRENDLINE from a chart. Here's how: Data Setup: Add sales data for the past 5 years, for example, in Column A and sales figures in Column B. FORECAST.LINEAR: Use this function by providing the future point you want to forecast, along with the known values (your historical data). Excel calculates the next value based on the existing trend. TRENDLINE (Graph Method): Create a chart with your data, add a Linear Trendline, & extend it to predict future values. The trendline visualizes the data's trend and even extend the trendline into the future.

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5 Extend the trendline

The fifth step is to extend the trendline to show the forecasted values on the chart. This can help visualize the trend and compare it with the actual data. To extend the trendline, right-click on the trendline, and select Format Trendline. In the Format Trendline pane, go to the Trendline Options section, and enter the number of periods you want to forecast in the Forward or Backward box. You can also check the Set Intercept box to set a specific value for the intercept of the trendline.

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6 Evaluate the accuracy

The final step is to evaluate the accuracy of your forecast based on the trendline. One way to do this is to use the R-squared value, which measures how well the trendline fits the data. The R-squared value ranges from 0 to 1, and the closer it is to 1, the better the fit. Another way to do this is to use the forecast error, which measures the difference between the actual and predicted values. The forecast error can be calculated by subtracting the predicted value fr88om the actual value and dividing it by the actual value. The smaller the forecast error, the more accurate the forecast.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you forecast future values based on a trend in Excel?

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1 Choose your data

2 Insert a chart

3 Add a trendline

4 Forecast future values

5 Extend the trendline

6 Evaluate the accuracy

7 Here’s what else to consider

Trend Analysis

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