Management trend analysis report involves estimating or predicting a business' future performance. It is the process by which a company thinks about and prepares for the future. Trend analysis is necessary for sound business planning as it provides relevant and reliable information about past and present events and the likely future events. It is a critical step in the business financial health checkup process. Those who create budgets without economic trend analysis are at risk of overspending and not having enough cash for unexpected costs or shortfalls in revenue.

It can be done through historical and research-based trend analysis. Historical trend analysis uses your business' economic history to predict the future. You may look at your last few annual Income Statements, Cash Flow Statements, and Balance Sheets to see how fast you've grown in the past. From there, you can estimate how fast you'll grow this year. On the other hand, research-based trend analysis means that you research market trends and use them to forecast. You may look at how the industry you're currently in has performed over the past ten years, look into emerging technologies, or evaluate your competitors' progress. Forecasts will give the managers confidence to make crucial decisions and help them determine short and long-term financial goals and create a balanced plan to meet those goals.

Your business' trend analysis then translates into a financial forecast. It is your business plan in numbers. It gives access to cohesive reports, allowing finance departments to establish business goals that are both realistic and feasible. Ultimately, it helps you decide how to spend your budget. You can lower your financial risks through trend analysis since it gives a bird's eye view of potential risks and helps you devise necessary avoidance strategies.