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P redicting H alf ‐Y early A ccounting I ncome N umbers W ith S tatistical M odels
Author(s) -
Matolcsy Z.P.,
Pazmandy G.P.
Publication year - 1995
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.1995.tb00382.x
Subject(s) - net income , accounting , earnings , economics , econometrics , audit , inflation (cosmology) , accounting method , earnings before interest and taxes , actuarial science , statistics , mathematics , physics , theoretical physics
Prediction of half‐yearly accounting income numbers has an important role in investment analysis, credit ratings, budgeting, auditing and other areas of the accounting and finance profession. This study provides the Australian evidence on two issues: the statistical relationship between half‐yearly accounting income numbers such as earnings per share, net profit and sales; and the ability of statistical models to predict these numbers. The study finds that the best way to predict the next period's half‐yearly accounting income numbers is to use the immediately preceding half‐yearly income number, and for inflation‐adjusted sales the corresponding previous half‐yearly figures, or to use a statistical model based on the immediately preceding half‐yearly figure adjusted by a statistically based “smoothing constant”.