Suppose That You Are Using the Four-Period Simple Moving Average

question 135

Multiple Choice

Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been increasing by 20% every period. How will your forecasts perform?

• A) Forecasts will be lower than actual.
• B) Forecasts will be higher than actual.
• C) Forecasts will equal actual.
• D) Forecasts will be decreasing.
• E) Forecasts will be increasing by 5.0% every period.

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Definitions:

Common Stock

A type of ownership in a corporation, typically with voting rights and participation in dividends.

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders or used for investment.

Other Revenues and Gains

Accounts that record income from activities that are not part of a business's core operations.

Unrealized Gain

The potential profit on an investment that has not been sold, reflecting an increase in value on paper but not realized as cash.