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Budgeting & Forecasting › Rolling Forecasts

How do you calculate and apply seasonal indices?

Intermediate

Answer

Seasonal indices measure how each period typically deviates from the average (e.g., Q4 = 1.3 means 30% above average). Calculate them from historical ratios of actual to deseasonalized/average values, then apply to the trend forecast (multiplicative) to reintroduce seasonality. This produces forecasts reflecting recurring seasonal peaks and troughs.
Trend forecast 100 x Q4 index 1.3 = 130 seasonal forecast.
Real-world example Applying a 1.3 Q4 index to the trend line captures the seasonal sales peak.

Common follow-ups: How are indices calculated? | How are they applied to a trend?

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All 30 Rolling Forecasts questions