Based on the 2 past paper questions on time series analysis (since June 2009), a numerical (ie 13 mark question) on time series for VGL may very well require students to predict further into the future than 2015 Q3 and Q4 and for students to do this by drawing a line of best fit through the various trend points plotted on a graph to reach the relevant quarter to be forecast, and then deducting the relevant average cyclical variation calculated for this particular quarter to give a more accurate forecast.
In terms of lines of best fit, when there is a lot of variation students can be advised to draw a shape around all trend points plotted on the graph, and then draw a line through the middle of the shape to give a roughly equal area on both sides.
Students may very well be given actual and / or trend figures for Q3 and / or Q4 on the day of the exam and be asked to predict further into the future.
Additional note: It is also unusual for the underlying trend to change direction so dramatically – students could, therefore, be given revised figures.
You must, therefore, be prepared for a variety of questions and practice the technique using a range of hypothetical figures.
Q1b is likely to be related to the calculations made in Q1a and so, if Q1a is on time series analysis Q1b may very well ask students to discuss the appropriateness of time series analysis in the context of the case study, which is clearly signposted as a possible question in lines 38-39 of the case study.
Be careful not to assume Q1a will be a time series analysis question. Although this is, perhaps, the most obvious 13 mark numerical question, calculation of liquidity and activity ratios are also standing out as strong contenders. Other ratio calculations (see below) and calculations relating to investment appraisal – in the context of diversification – should also not be ignored.