Which of the following is considered a disadvantage of trend analysis?

Trend analysis is useful for making projections based on historical performance by identifying patterns over time. However, one of its limitations is that it may overlook cyclical fluctuations inherent in the data. Many financial metrics can be influenced by economic cycles, seasonal events, or other periodic variations. If these cyclical patterns are not accounted for, the projections derived from trend analysis can lead to misleading conclusions, as they may not accurately reflect future performance where such cycles play a significant role. By failing to consider these fluctuations, analysts could be misled about the actual revenue potential or expense trends, thereby negatively impacting budgeting and financial planning decisions.