Lesson 3.3.1

3.3.1 Time-series analysis and sales forecasting Quiz: Pearson Edexcel Business, Unit 3

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.3.1, Time-series analysis and sales forecasting: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 3: Business decisions and strategy, written with Revision Ninja.

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The 20 questions

  1. What is the main purpose of calculating a moving average in sales forecasting?

    • Measure market share
    • Smooth data fluctuations
    • Determine unit costs
    • Calculate profit margins

  2. How many consecutive data points are used in a three-period moving average?

    • Three
    • Four
    • Twelve
    • Two

  3. Which pattern in sales data is removed by using a four-quarter moving average?

    • Cyclical fluctuations
    • Random fluctuations
    • Long-term trends
    • Seasonal variations

  4. What is a line of best fit on a scatter graph primarily used for?

    • Proving causality
    • Extrapolating trends
    • Measuring inflation
    • Calculating payback

  5. What does the term extrapolation mean in sales forecasting?

    • Discounting cash flows
    • Extending past trends
    • Averaging quarterly data
    • Calculating profit margins

  6. What key assumption limits the accuracy of quantitative sales forecasting?

    • Profit margins rise
    • Past trends continue
    • Cash flows equalise
    • Interest rates fall

  7. A scatter graph showing sales rising alongside increased advertising spend demonstrates what relationship?

    • Direct causation
    • Negative correlation
    • Zero correlation
    • Positive correlation

  8. What is the three-period moving average of 40, 50 and 60?

    • 50
    • 150
    • 40
    • 60

  9. What is the four-quarter moving average of quarterly sales of 20, 30, 25 and 35 (in thousands)?

    • 25
    • 27.5
    • 110
    • 30

  10. Annual sales were 100, 110 and 120 (in thousands) over three years. Using a straight-line trend of +10 per year, what is the forecast for year four?

    • 110 thousand
    • 130 thousand
    • 140 thousand
    • 125 thousand

  11. Quarterly sales in a year were 200, 240, 180 and 260 (in thousands). What is the four-quarter moving average?

    • 880 thousand
    • 240 thousand
    • 200 thousand
    • 220 thousand

  12. High correlation between advertising and sales on a scatter graph does not prove what?

    • Extrapolation
    • Causation
    • Profitability
    • Seasonality

  13. Which event is most likely to render an extrapolated sales forecast inaccurate?

    • Predictable seasonality
    • Stable exchange rates
    • New competitor entry
    • Constant interest rates

  14. A firm's quarterly sales show a regular summer peak each year. Which technique is most likely to remove this pattern for analysis?

    • A payback calculation
    • A critical path analysis
    • A decision tree
    • A four-quarter moving average

  15. Using a three-period moving average on the sequence 15, 18, 21, what is the average?

    • 18
    • 54
    • 21
    • 15

  16. What benefit does calculating a moving average provide when analysing raw sales data?

    • Eliminates exchange risk
    • Guarantees future profit
    • Calculates net profit
    • Smooths random fluctuations

  17. What is a major weakness of using moving averages to forecast sales trends?

    • Overstates initial outlay
    • Ignores historical data
    • Requires complex calculus
    • Lags behind changes

  18. Which qualitative factor can make quantitative sales forecasts inaccurate?

    • High initial outlay
    • Three-period averaging
    • Seasonal smoothing
    • Changing consumer tastes

  19. How does a one-off bulk order affect an extrapolated sales forecast if left unadjusted?

    • Understates future sales
    • Overstates future sales
    • Lowers moving averages
    • Eliminates trend bias

  20. Why does extrapolating a line of best fit far into the future increase forecasting risk?

    • Data becomes unpredictable
    • Costs always decrease
    • Trends remain constant
    • Sales grow exponentially

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