[ \textSeasonal Ratio = \frac\textActual Value\textCentered Moving Average ]
Now each index shows the seasonal effect relative to the overall average. Suppose quarterly sales (in $1,000) for two years: seasonal index
[ \textActual = \textTrend \times \textSeasonal \times \textIrregular ] seasonal index
[ \textAdjusted Index_i = \frac\textRaw Index_i\textMean of Raw Indices ] seasonal index
(We’ll skip full arithmetic for brevity – but you’d smooth the data.)
After dividing actual by the seasonal index, you get , which reveals the true trend and cycle.