REPORT ON TIME SERIES ANALYSIS

To : The Executive Committee

From : Bruce
Subject :
Date :

I/ Introduction:

In the previous analysis, we analyzed small- and medium-sized firms on what the government
needed to know in order to manage a large number of SMEs. The purpose of this report is to
analyze data to determine whether there is a seasonal pattern present. Once this is done, there
will be a suitable forecasting model to predict the figures for Year 2018 using the moving
average method.

II/ Key Findings from the Survey Conducted:

The following is a summary of what we found in the previous report:

 For customers:

Money Milk Tea has succeeded in capturing the market with the popularity of milk tea among
young people today. At cheap prices, Money has attracted a large number of customers to their
shop. However, their products are not really good.

 For employees:

For employees, the work at Money Milk Tea is not too stressful, the owner treats them quite
well. However, there are some opposing opinions.

 For Neighbors:

Money's garage is on the sidewalk, so parking lots here makes the sidewalk cramped so there is
no place for pedestrians to make traffic here very messy. Moreover, parking on the other side of
the road will make customers here have to go back and forth often make the traffic situation even
worse.

Also, the noise from the shop and the waste water as well as garbage bothered the people around.

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III/ Analysis on the Bank Loans of SMEs:

Year Micro - size Small – size Medium – size

2012
Jan – June 52 66 77
July – Dec 40 58 69
2013
Jan – June 38 53 58
July – Dec 29 37 45
2014
Jan – June 26 36 44
July – Dec 22 33 37
2015
Jan – June 24 35 46
July – Dec 19 24 32
2016
Jan – June 38 51 60
July – Dec 34 43 51
2017
Jan – June 40 55 66

A time series is a sequence of numerical data points in successive order. In investing, a time
series tracks the movement of the chosen data points, such as a security’s price, over a specified
period of time with data points recorded at regular intervals. Time series analysis is a tool that
helps us to predict market trends by analyzing old data over a period of time. Time series
includes the following methods:

Moving average: A moving average (MA) by filtering out the “noise” from random
is a widely used indicator in technical price fluctuations. It is a trend-following, or
analysis that helps smooth out price action

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lagging, indicator because it is based on past
prices [ CITATION Inv17 \l 1033 ].
Seasonal Variation: In a year there will be
seasonal factors, such as weather,
enrollment, or a sports season. These factors
can make the data change dramatically.
Seasonal Variation is used to identify change
rules in economic data.

The following is time series of micro-size enterprises.

Year Semester % of Bank Moving Total Moving Total Moving Seasonal

loan of 2 Semester of 4 Semester Average of 4 Variation
Semester

2012 Jan – June 52

July – Dec 40 92 170 42.5 -2.5

2013 Jan – June 38 78 145 36.25 1.75

July – Dec 29 67 122 30.5 -1.5

2014 Jan – June 26 55 103 25.75 0.25

July – Dec 22 48 94 23.5 -1.5

2015 Jan – June 24 46 89 22.25 1.75

July – Dec 19 43 100 25 -6

2016 Jan – June 38 57 129 32.25 5.75

July – Dec 34 72 146 36.5 -2.5

2017 Jan - June 40 74

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 Time series of Micro - size SMEs
60 8

6
50
4
40
2

30 0

-2
20
-4
10
-6

0 -8
Movi ng Tota l (4 s emesters ) Movi ng Average 4 s emesters )
Sea s onal Vari ation

Year Semester Trendline

Semesters
Year January – June July – December 2016 July – 36.5 36.5

2012 -2.5 December

2013 1.75 -1.5 2017 January - June 35.75

2014 0.25 -1.5 July – 35
2015 1.75 -6 December
2016 5.75 -2.5 2018 January - June 34.25
2017 July – 33.5
Average 2.375 -2.8 December

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 36.5−42.5
Trendline indicate = =−0.75
8

Task 4
1. Payback period

It is the period of time (year, month) that investors can compensate for the present value of the
capital that the investor has spent.

To calculate Payback Period, we use this formula:

Payback Period = Initial Investment / Cash Inflow per Period

Or we use:

Payback Period = Number of years prior to full recovery of investment + Unrecovered cost at
start of year/Cash flow during full recovery year

(Source: Peavler, 2016)

Discounted Payback Period is used to determine the profitability of a project. Discounted

Payback Period takes into account the time value of money by discounting each cash flow before
the cumulative cash flow is calculated, and determines the time at which the net present value
becomes positive

1. Accounting Rate of Return

Accounting rate of return (also known as simple rate of return) is the ratio of estimated
accounting profit of a project to the average investment made in the project [ CITATION Acc172
\l 1033 ].

Formula: ARR = Average Accounting Profit / Average Investment

1. Net Present Value

Net present value is a calculation that compares the amount invested today to the present value of
the future cash receipts from the investment. In other words, the amount invested is compared to
the future cash amounts after they are discounted by a specified rate of return [ CITATION
Acc171 \l 1033 ].

Formula: NVP = [Sn / (1+r) n] – Initial Investment

n is number of time periods.

Sn is net cash inflow during the period n.

r is discount rate