The Difference between Univariate and Multivariate Financial Analysis

Utilizing financial analysis is not only be beneficial for any business or organization that is looking to make a profit and further their credibility in each year of income, but it can also be very beneficial for those that are self employed or those that work regular jobs and are simply trying to properly budget their money to maximize both their earnings and their savings. There are two major differentiating financial analysis styles; univariate and multivariate. The difference between these two styles of analysis is simple. Univariate focuses on one source for statistics such as once source of income whereas multivariate focuses on multiple sources for statistics.

The meaning of univariate

A “univariate” financial analysis basically defines calculating income based on statistics from a single source. This can be both simple and in depth. In business terms, it can mean that the main variable of income is influenced solely by one means such as making money solely from clients or making money solely from advertising. For charities, it can be making money solely from donations. Univariate financial analysis can be very beneficial but in many ways it differs from multivariate due to the fact that it is limited solely to one source of income and subsequent calculation. Simply put; univariate financial analysis focuses solely on one aspect of income and one single subject.

The meaning of multivariate

Multivariate financial analysis means calculating profits and income from multiple sources. This can be prominent in both small and large businesses. Smaller businesses can become multivariate if the total analysed income at the end of the financial year is calculated by more than one worker and from a variety of different sources such as advertising campaigns, donations and income based on jobs completed for clients. Multivariate financial analysis is much more common in the modern business world due to the fact that people very rarely operate alone without assistance and very rarely have only one means of income. Multivariate financial analysis basically focuses on multiple sources and multiple subjects to come up with the final statistics.

Financial analysis can be a flawless means of calculating spending and savings budgets as well as allowing relevant statistics to pinpoint company progression, potential successes and potential losses. Financial analysis is an important detail that all businesses and organizations whether small, large or self employed should pay careful consideration to. The two main types of financial analysis are univariate which focuses solely on one subject to present the final statistics and multivariate which focuses on multiple subjects to present the final statistics.