How to Use the Forecast and Trend Function in Excel

Before we dive into a discussion of the forecast and trend function in Excel, we should make sure that the terms we’re using are understood.

What Is a Forecast?

A forecast predicts something for the future. For example, the expectations of the future numbers in terms of company growth can be called a forecast. The forecast function, in short, is used to calculate the straight lines that are based on known X and Y values. The values of Y can be calculated for the values of X inside or outside the range of the X values.

What Is a Trend?

A trend is something that represents a particular status of something currently happening. For instance, there is a trend for the youth of today’s generation to be rather glued to their smartphones. OK, maybe not all of them, but it is definitely a trend!

The trend function, much like the forecast function, is used to calculate a straight line based on known X and Y values. The values of Y can be calculated for the values of X inside or outside the known range of X values. The trend here can be used to either interpolate or extrapolate the data. Similarly, in terms of Excel, the understanding goes like this:

• The forecast is for a single value; and a trend is for multiple values.
• The forecast computes a single new Y value for a single X new value; whereas a trend is more suited to data points in the form of a series (e.g., the time series).

Forecast in Excel

The forecast function in Excel generally has three main categories.

1. Consider the X value
2. Consider the Y value—which means the already existing value for Y
3. The last category is known as the new values for X

While inputting these values to run and execute, it delivers the baby Y which is the forecast value. This also means that the forecast in Excel will also help in generating single values or output that is derived from the input values.

Trend in Excel

Trend generally has four categories.

1. The first category is generally known for Y values
2. The second category is known for the X values
3. The third category is known for the new values of X
4. And the last category is known for the constant value

The constant value, for example, means that you have limited amount to spend each month, or the converse—that there is no limit to the amount you are able to spend each month. This function will help you deliver baby Y values as their result.

You can also say that the trend function will either help you deliver a single value, or a series of values. A series is usually shown as an array, followed by functionality as a result.

The Major Advantages of Using the Forecast and Trend function in Excel Sheets

Some advantages of using these functions are as follows:

• Both the functions help in predicting the values that are missing in existing data. The missing values here might be the experimental or future data.
• Both the functions work similarly and will generate the same results. But as we know forecast helps in delivering a single value, whereas trend helps in delivering an array of values.
• Both the functions have some type of relationship with the data. And all data should correlate with each other or it turns out to be meaningless.

Happy working with Excel!