[top]: Seasonal Index

This ratio represents the combined effect of seasonality and random noise. Group all ratios by month (or quarter, etc.) and calculate the median or mean (median is less sensitive to outliers). Step 4: Adjust So That Average = 1 If the average of your raw seasonal indices is not exactly 1, adjust them:

[ \textSeasonal Ratio = \frac\textActual Value\textCentered Moving Average ] seasonal index

[ \textAdjusted Index_i = \frac\textRaw Index_i\textMean of Raw Indices ] This ratio represents the combined effect of seasonality

Now each index shows the seasonal effect relative to the overall average. Suppose quarterly sales (in $1,000) for two years: 000) for two years: