How is "indexing" related to analysis?

Indexing is a statistical method used in analysis to compare different values to a base year, allowing for an understanding of growth, trends, and changes over time. When a specific year is set as a "base year," all subsequent values can be expressed as a percentage of this base year, which makes it easier to see how much an item or metric has changed relative to that earlier point in time.

By using indexing, analysts can track performance metrics across different time periods seamlessly. For example, if examining sales figures, using indexing would allow for a quick assessment of whether sales have increased, decreased, or remained stable compared to the base year, leading to better-informed decisions based on historical performance.

While total expenses, sales performance, and employee productivity are essential factors in business analysis, they do not directly define the indexing concept. Instead, those factors can be evaluated using indexed data to provide deeper insights. Therefore, emphasizing how indexing specifically involves comparisons to a base year clarifies its critical role in analysis.