Disadvantages and advantages of using a separate statistical method in management accounting
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Date
2023
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Ivane Javakhishvili Tbilisi State University Press
Abstract
Advantages of simple linear regression analysis are as follows:
Easy to use;
Considers the main relationship between two sets of data;
Can be used to prepare forecasts and budgets;
Simplifies the budgeting process.
Limitations of simple linear regression analysis are as follows:
It assumes that there is a linear relationship between the variables;
The relationship between only two variables is evaluated. In fact, the dependent variable is
influenced by many other independent variables;
Tendonously, only interpolation predictions are reliable. Equation should not be used for
extrapolation;
Regression analysis assumes that the historical behavior of data in the past will continue in
the near future too;
Interpolation forecast is reliable between data, only in case of strong correlation.
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Citation
Conference Proceedings: "The World Economy in the Post-Pandemic Period: Implications and Challenges", Tbilisi, 2023, pp. 355-364