Computing trendline values in excel Presentation Transcript

1. Trendline values in excel charts Computing trendline values using excel formulas
and functions Warning: This is for those who wish to explore trendlines in excel. For others, this
presentation may be intimidating Kindly exercise caution!

2. Trendlines in charts A trend line is a straight line connecting multiple points on a

chart. A trend is a movement in a particular direction The magnitude of the slope of a trend line,
or steepness, indicates the strength of the trend. Trendlines can be used to forecast future !

3. Six types of trend lines Linear Logarithmic Polynomial Power Exponential Moving Average How to
Create a Trendline? Have a look at my earlier post in LCDing

4. Rule of thumb to use type of Trendline 1. Linear trendline : use it if data values are
increasing or decreasing at a steady rate. 2. L ogarithmic trendline : Useful when the rate of
change in the data increases or decreases quickly and then levels out. 3. Polynomial trendline :
Used when there are data fluctuations like the sales following seasonal trends

5. Rule of thumb to use type of Trendline 4. Power trendline : Use with data that has
values that increase at specific rate at regular intervals. 5. Exponential trendline : Use when
data values increase or decrease rates that are constantly increasing. 6. Moving average
trendline : Use it when uneven fluctuations are in data values

6. How to compute trendline values using excel formulae? You can use the formulas
given in the next few slides. Alternatively, you can download and use the excel attached with all
formulas. To download excel file, click here

7. Linear Trendline equation Equation: y = m * x + b Where, m =SLOPE(y,x) b

=INTERCEPT(y,x) RSQ =RSQ(y,x)

8. Logarithmic Trendline equation Equation: y = (c * LN(x)) + b Where, c

=INDEX(LINEST(y,LN(x)),1) b =INDEX(LINEST(y,LN(x)),1,2) RSQ =RSQ(y,LN(x))

9. Power Trendline Equation Equation: y=c*x^b Where, c

=EXP(INDEX(LINEST(LN(y),LN(x),,),1,2)) b =INDEX(LINEST(LN(y),LN(x),,),1) RSQ
=INDEX(LINEST(LN(y),LN(x),TRUE,TRUE),3,1)

10. Exponential Trendline equation Equation: y = c *e ^(b * x) Where, c

=EXP(INDEX(LINEST(LN(y),x),1,2)) b =INDEX(LINEST(LN(y),x),1) RSQ =RSQ(LN(y),x)

11. Polynomial Trendline(2 nd order) Equation Equation: y = (c2 * x ^2) + (c1 * x^1) + b
Where, c2 =INDEX(LINEST(y,x^{1,2}),1) c1: =INDEX(LINEST(y,x^{1,2}),1,2) b =
INDEX(LINEST(y,x^{1,2}),1,3) RSQ =INDEX(LINEST(y,x^{1,2},TRUE,TRUE),3,1)

12. Polynomial Trendline(3 rd order) Equation Equation: y=(c3*x^3) + (c2*x^2) +

(c1*x^1) +b Where, c3 =INDEX(LINEST(y,x^{1,2,3},1) c2 =INDEX(LINEST(y,x^{1,2}),1) c1
=INDEX(LINEST(y,x^{1,2}),1,2) b = INDEX(LINEST(y,x^{1,2}),1,3) RSQ
=INDEX(LINEST(y,x^{1,2,3},TRUE,TRUE),3,1)

13. Polynomial Trendline(4 th order) Equation Equation: y= (c4*x^4)+(c3*x^3) +

(c2*x^2) + (c1*x^1) +b Where, c4 = INDEX(LINEST(y,x^{1,2,3,4},1) c3
=INDEX(LINEST(y,x^{1,2,3},1) c2 =INDEX(LINEST(y,x^{1,2}),1) c1
=INDEX(LINEST(y,x^{1,2}),1,2) b = INDEX(LINEST(y,x^{1,2}),1,3) RSQ
=INDEX(LINEST(y,x^{1,2,3,4},TRUE,TRUE),3,1)

14. Polynomial Trendline(5 th order) Equation Equation: y= (c5*x^5)+(c4*x^4)+(c3*x^3)

+ (c2*x^2) + (c1*x^1) +b Where, c5 = INDEX(LINEST(y,x^{1,2,3,4,5},1) c4 =
INDEX(LINEST(y,x^{1,2,3,4},1) c3 =INDEX(LINEST(y,x^{1,2,3},1) c2
=INDEX(LINEST(y,x^{1,2}),1) c1 =INDEX(LINEST(y,x^{1,2}),1,2) b =
INDEX(LINEST(y,x^{1,2}),1,3) RSQ =INDEX(LINEST(y,x^{1,2,3,4,5},TRUE,TRUE),3,1)

15. Polynomial Trendline(6 th order) Equation Equation: y=(c6*x^6)+(c5*x^5)+

(c4*x^4)+(c3*x^3) + (c2*x^2) + (c1*x^1)+b Where, c6 = INDEX(LINEST(y,x^{1,2,3,4,5,6},1) c5 =
INDEX(LINEST(y,x^{1,2,3,4,5},1) c4 = INDEX(LINEST(y,x^{1,2,3,4},1) c3
=INDEX(LINEST(y,x^{1,2,3},1) c2 =INDEX(LINEST(y,x^{1,2}),1) c1
=INDEX(LINEST(y,x^{1,2}),1,2) b = INDEX(LINEST(y,x^{1,2}),1,3) RSQ
=INDEX(LINEST(y,x^{1,2,3,4,5,6},TRUE,TRUE),3,1)

16. Just incase you need more details I have learned these formulas form the
following web sites and authors. Click the links below Trendline formulas Bernard Liengmes
website Tushar Mehtas article Ozgrid Forum Trends-and-forecast-sales-with-charts Choosingthe-best-trendline-for-your-data

17. Backup slides.. In case you need

18. Few Basics Excel functions used - 1 X= Known X's (e.g.: Months on X Axis) Y=
Known Y's (e.g.: Sales on Y Axis) Details of Excel functions are taken from Excel Help LN LN
( number ) Returns the natural logarithm of a number. Natural logarithms are based on the
constant e (2.71828182845904). Liniest LINEST ( known_y's ,known_x's,const,stats)
Calculates the statistics for a line by using the "least squares" method to calculate a
straight line that best fits your data, and returns an array that describes the line. Because this
function returns an array of values, it must be entered as an array formula. Exp EXP ( number )
Returns e raised to the power of number. The constant e equals 2.71828182845904, the base
of the natural logarithm. Index INDEX ( array ,row_num,column_num) INDEX ( reference
,row_num,column_num,area_num) Returns a value or the reference to a value from within a
table or range. There are two forms of the INDEX() function: array and reference. The array
form always returns a value or an array of values; the reference form always returns a
reference.

19. Few Basics Excel functions used - 2 RSQ RSQ ( known_y's , known_x's )
Returns the square of the Pearson product moment correlation coefficient through data points
in known_y's and known_x's. For more information, see PEARSON. The r-squared value can
be interpreted as the proportion of the variance in y attributable to the variance in x. Slope
SLOPE ( known_y's , known_x's ) Returns the slope of the linear regression line through data
points in known_y's and known_x's. The slope is the vertical distance divided by the horizontal
distance between any two points on the line, which is the rate of change along the regression
line. Intercept INTERCEPT ( known_y's , known_x's ) Calculates the point at which a line will
intersect the y-axis by using existing x-values and y-values. Logest LOGEST ( known_y's
,known_x's,const,stats) In regression analysis, calculates an exponential curve that fits your
data and returns an array of values that describes the curve. Because this function returns an
array of values, it must be entered as an array formula.