Day 5 – Quantitative Analysis (BUS-600)

1. Quantitative analysis provides the basic tools and techniques used in finance, accounting, marketing, and business operation. It helps us to remain objective when solving complicated problems. The key analyses in quantitative analysis are Decision tree analysis, Cash flow analysis, Net Present Value, Probability Theory, and Regression analysis and forecasting.
2. Decision tree analysis is the technique to break complex problems into manageable parts. It is diagrams that include activity forks and event forks. It provides probabilities and the expected monetary value to help deciding for the choices on the best and most efficient approach.
3. Cash flow analysis is using the accounting cash flow theory to analyze quantitatively define the value of the investment, calculating the magnitude of the benefits, determine the timing of the benefit, quantify the uncertainty of the  benefits, as well as estimating whether the benefit is justify the wait.
4. Net present value analysis is a technique to take future cash flows and discount them back to their present value. It provides a quantitative measure for the future projection back to today’s dollar amount.
5. In the business and market, there are many uncertain things that are widely spread out for various possibilities. Probability theory provides statistic techniques to quantify these uncertainties. Analyzing the probability and the distribution will help us to make right decision with scientific meaning.
6. Regression analysis and forecasting are the important method to predict the relations and projections for different variables.  Linear regression model is to determine the relationship between variable that analyst believe intuitively to be related.  Regression analysis involves gathering sufficient data to determine the relationship between variables, such as sales to price, promotion, market forecasting etc. Other technique to help forecasting is Time series technique and moving average analysis, which determine the trend and cycle of the business activity.