What Do You Mean By Seasonal Index? Explain The Ratio To Link The Method Of Measuring Seasonal Variation.

The seasonal variations are short term movements that indicate the identical changes in a time series during the corresponding seasons. These are periodic in nature and are repeated with the same pattern within a specific time period. A measure of seasonal variation which is usually measured in index form, is called seasonal index. To compute seasonal indices, the components of the time series are assumed to follow the multiplicative model. The seasonal variations can be calculated by using link relative method. Firstly, calculate the link relatives by expressing each monthly or quarterly value as a percentage of the preceding monthly or quarterly value. Secondly, takes the average of the like relatives for each quarter or month. Thirdly, convert these average link relatives into chain indices by setting the value of first month and quarter as 100. Fourthly adjust the chain indices by using correction factor.