Linear Regression Projection

Using linear regression in determining our audit expectations for select accounts. For X axis, we use the 4 year financial data of each account. For Y axis we use the amount for each account. We use both Income statement and Balance sheet (For comparative and common size I/S and B/S) data in our regression calculation to find the projected 2011 value of the four accounts (sales, cost of goods sold, gross margin, and current assets). They are as follows:

Graph: Sales, CoGS, Gross Profit, Current Assets projection in linear regression

• Net Sales : $337,843
• COGS : $257,282
• Gross Margin : $80,561
• Current Assets : $225,700
  
  
  Note: An example on how to use linear regression in SAS 99 audit brainstorming.
  
  
  Andreas