Noora Sarkkinen and Viivi Puuronen
Advanced financial analysis term paper

Term Paper
Oulu Business School
12/2013

contents

1 INTRODUCTION………………………………………………………………...3
2 DATA ANALYSIS………………………………………………………………..4 2.1 Table 1 Analysis…………………………………………………..5
2.2 Table 2.1 and 2.2 analysis………………………………………...8

3 CONCLUSION…………………………………………………………………..10
APPENDIX 1 OVERVIEW OF THE TERM PAPER PROJECT……………..12
REFERENCES……………………………………………………………………..13

introduction
The purpose of this term paper is to analyze accuracy of the analysts’ forecasts during 2012 on the Finnish stock markets, focusing on EPS and sales forecasts. We are using the forecasts from January 2012 which could be quite far from the actual for example comparing to the forecasts of December 2012. We are going to see if the analysts’ forecasts differ much from those of the Naïve model. According to the article “Comparative Analysis of European Earnings Forecasts” by Capstaff, Paudyal and Rees (Journal of Business Finance & Accounting, 28(5) & (6), June/July 2001, 0306-686X), the bias in analysts’ forecasts is positive in all (European) countries and the naïve forecast bias is negative in all countries. Moreover, they state that analysts’ forecasts are substantially more accurate than the naïve model. We find this investigation interesting because it is nice to know if the Naïve model is better than the analysts’ forecasts. In that case we could consider whether there is a role for the analysts at all. Also it is nice that the data is Finnish so it might be that there is not much investigation done before.

* 2 DATA ANALYSIS Table 1

| Minimum | Maximum | Mean | Median | St.deviation | Skewness | Kurtosis | EPS2012 | -0,900 | 4,658 | 0,658 | 0,380 | 0,878 | 1,625 | 4,264 | EPS2011 | -0,520 | 4,240 | 0,692 | 0,410 | 0,801 | 1,710 | 3,914 | SALES2012 | 4831000 |