ACCA Strategic Professional · Strategic Business Leader · Finance transformation
Harlow Retail plc holds years of till transactions, loyalty-card records and website clickstreams. The finance director asks the analytics team to examine this data to explain why gross margin fell last quarter in the northern stores. Which type of analytics is the team mainly performing?
The team is doing diagnostic analytics. It uses historical data to explain why an outcome, here the fall in northern gross margin, occurred. Descriptive analytics only reports what happened, while predictive and prescriptive analytics look forward and recommend actions.
- ADescriptive analytics, which summarises what happened
- BDiagnostic analytics, which investigates why it happenedCorrect
- CPredictive analytics, which forecasts what will happen
- DPrescriptive analytics, which recommends what action to take
Explanation
The question asks why margin fell, which is a search for causes in past data. That is diagnostic analytics. Descriptive analytics would only report the fall, predictive would forecast future margin, and prescriptive would recommend actions.
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