Extrapolation is one of the most reliable analytical tools in forecasting earnings.

Question

Quizplus · Accepted Answer

While extrapolation can be useful in some cases, it is not always reliable in forecasting earnings. Extrapolation assumes that past trends will continue into the future without accounting for any unforeseen events or changes in the market. Other factors such as changes in regulation, competition, and technology can greatly impact future earnings and cannot be accurately predicted through extrapolation alone.

Extrapolation Is One of the Most Reliable Analytical Tools in Forecasting