2239 words - 9 pages

Noora Sarkkinen and Viivi Puuronen

Advanced financial analysis term paper

Term Paper

Oulu Business School

12/2013

contents

1 INTRODUCTION………………………………………………………………...3

2 DATA ANALYSIS………………………………………………………………..4

2.1 Table 1 Analysis…………………………………………………..5

2.2 Table 2.1 and 2.2 analysis………………………………………...8

3 CONCLUSION…………………………………………………………………..10

APPENDIX 1 OVERVIEW OF THE TERM PAPER PROJECT……………..12

REFERENCES……………………………………………………………………..13

introduction

The purpose of this term paper is to analyze accuracy of the analysts’ forecasts during 2012 on the Finnish stock markets, focusing on EPS and sales forecasts. We are using the forecasts from January 2012 which could be quite far from the ...view middle of the document...

1 Table 1 analysis

First we used the R-studio to summarize the key statistics of the 77 observations’ EPS, sales and the forecasts for them (Table 1).

EPS2012 minimum value is -0.9 and maximum value 4.68. The corresponding numbers for the year 2011 are -0.52 and 4.24. The forecast for the year 2012 is quite close to the actual values of the previous year, forecasted minimum is -0.49 and maximum 4.3.

Forecasted median is 0.39 which is between the actual values of 2011 and 2012, median of 2011 being 0.41 and median of 2012 being 0.38. Mean behaves the same way: forecasted mean is 0.686 (2011: 0.6923 and 2012: 0.6584). Both measures of central tendency are higher in 2011.

Skewness measure for the year 2012 is 1.625 and for 2011 1.710 so both distributions are skewed to the right. Both distributions are quite far from normal distribution which is also the case with forecasted EPS for 2012, skewness measure is 1.829. Kurtosis measure is higher in the year 2012 (4.264) than 2011 (3.914). Both distributions have high measures of kurtosis. The forecasted kurtosis for the year 2012 is 4.796 which is even higher.

The forecasted standard deviation for the year 2012 is the lowest; 0.777. 2011 standard deviation is a bit higher, 0.801 and in 2012 even higher 0.878.

SALES2012 minimum value is €4.831 million which is significantly higher than the minimum of 2011 which is €1.007 million. The forecasted minimum is €1.000 million which is not only much too low but also in the wrong direction. Maximum value for 2012 is €1.05 billion and for 2011 €1.04 billion. Forecast for 2012 is exactly the same as the actual value for 2011 (€1.04 billion).

Means for both years are close to each other, 2011: €3.602 million and 2012: €3.587 million. The forecast for 2012 is between these two: €3.579 million. On the contrary, forecasted median is below the both years, it’s only €645 million while actual values are 2011: €674 million and 2012: €652 million.

Skewness measure is highest for the year 2012: 7.05. Lowest skewness is for the year 2011 which is 6.78 and the forecasted skewness is between these two: 6.79. The same goes with kurtosis. It seems like forecast has went to the right direction but not adequately.

Standard deviation is highest for the year 2012 and forecast is closer to the actual value of the year 2011.

Table 2.1 and 2.2

| Minimum | Maximum | Mean | Median | St.deviation | Skewness | Kurtosis | Shapiro-Wilk | P-Value |

EPS ERROR | 0,000 | 5,727 | 0,621 | 0,273 | 0,955 | 3,080 | 11,271 | 0,612 | 1,343E-12 |

EPS BIAS | -5,727 | 3,988 | -0,110 | 0,410 | 1,136 | -0,983 | 9,028 | 0,776 | 3,47E-09 |

SALES ERROR | 0,004 | 0,411 | 0,099 | 0,079 | 0,087 | 1,299 | 1,578 | 0,876 | 0,000002901 |

SALES BIAS | -0,724 | 0,793 | 0,017 | 0,033 | 0,191 | -0,453 | 5,769 | 0,864 | 0,00000093 |

NAIVE EPS ERROR | 0,007 | 7,500 | 0,775 | 0,261 | 1,308 | 3,198 | 11,597 | 0,579 | 3,059E-13 |

NAIVE EPS BIAS | -4,171 | 7,500 | 0,237 | -0,052 | 1,504 | 2,115 | 9,458...

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