Autoregressive Integrated Moving Average (ARIMA) Algorithm Adaptation for Business Financial Forecasting

Authors

  • Khyrina Airin Fariza Abu Samah College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia
  • Nurul Azifah Mohd Khalid College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia
  • Jamaluddin Jasmis College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia
  • Noor Afni Deraman College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia
  • Lala Septem Riza Department of Computer Science Education, Universitas Pendidikan Indonesia, Bandung, Indonesia
  • Zainab Othman College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

DOI:

https://doi.org/10.37934/araset.38.1.3747

Keywords:

Financial Forecasting, Financial Ratio, Dutch Lady, Autoregressive Integrated Moving Average

Abstract

Financial management is the key to running a successful business, and financial forecasting is crucial to every business. Companies face difficulties making the right decision regarding their goals as they experience uncertainties in ensuring business growth. This study uses Dutch Lady company as a case study to help identify the company’s performance based on eight financial ratios and visualize the results using the visualization technique. Hence, the autoregressive integrated moving average (ARIMA) algorithm and visualization techniques were applied to overcome the problems. The data is obtained from the last quarterly report for the study purpose. There are 14 variables collected and used to calculate the eight financial ratios. The predictive modelling uses the ARIMA algorithm, and the models were evaluated using two types of error metrics: 1) mean absolute error (MAE) and 2) root mean squared error (RMSE). The reliability testing for the system’s prediction model shows a result p-value<0.05, and functionality testing successfully met the aims. The error metric evaluation result shows no significant differences between the forecast and actual values. The models can appropriately predict and forecast the financial ratio as the rules for both MAE and RMSE are fulfilled. The forecast results of each financial ratio are visualized and presented through the web-based system.

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Author Biographies

Khyrina Airin Fariza Abu Samah, College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

khyrina783@uitm.edu.my

Nurul Azifah Mohd Khalid, College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

nurulazifahkhalid98@gmail.com

Jamaluddin Jasmis, College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

jamaluddinjasmis@uitm.edu.my

Noor Afni Deraman, College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

noora465@uitm.edu.my

Lala Septem Riza, Department of Computer Science Education, Universitas Pendidikan Indonesia, Bandung, Indonesia

lala.s.riza@upi.edu

Zainab Othman, College of Computing, Informatics and Mathematics, Universiti Teknologi MARA Melaka Branch, Jasin Campus, Melaka, Malaysia

zainab_othman@uitm.edu.my

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Published

2024-01-24

How to Cite

Khyrina Airin Fariza Abu Samah, Mohd Khalid, N. A., Jasmis, J., Deraman, N. A., Riza, L. S., & Othman, Z. (2024). Autoregressive Integrated Moving Average (ARIMA) Algorithm Adaptation for Business Financial Forecasting. Journal of Advanced Research in Applied Sciences and Engineering Technology, 38(1), 37–47. https://doi.org/10.37934/araset.38.1.3747

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Articles