ACCA Strategic Professional · Strategic Business Leader · Finance transformation
Halden Retail's finance team currently reports last quarter's sales variances to the board. The CFO wants to use analytics to show why sales fell in the northern region, by combining till data, weather records and competitor promotions. Which type of analytics is the CFO primarily seeking?
The CFO wants diagnostic analytics. It explains why an outcome, here the fall in northern sales, occurred by linking sources such as till data, weather and competitor promotions. Descriptive analytics only reports what happened, while predictive and prescriptive analytics look ahead and recommend actions.
- ADescriptive analytics, because it summarises what happened in the past
- BDiagnostic analytics, because it investigates why an outcome occurredCorrect
- CPredictive analytics, because it forecasts future sales volumes
- DPrescriptive analytics, because it recommends the best action to take
Explanation
The aim is to explain why sales fell by linking several data sources, which is diagnostic analytics. Descriptive analytics only reports what happened, which the team already does with variance reports. Predictive and prescriptive analytics look forward and recommend actions, which is not the stated aim.
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