A simple moving average (SMA) is an arithmetic moving average calculated by adding recent prices and then dividing that figure by the number of time periods in the calculation average. To calculate moving averages for this data set, take the following steps.\r\n\r\n\"image0.jpg\"\r\n

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    To calculate a moving average, first click the Data tabs Data Analysis command button.

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    When Excel displays the Data Analysis dialog box, select the Moving Average item from the list and then click OK.

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    Excel displays the Moving Average dialog box.

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    Identify the data that you want to use to calculate the moving average.

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    Click in the Input Range text box of the Moving Average dialog box. Subscribe for little revelations across business and tech, Learn marketing strategies and skills straight from the HubSpot experts, When it comes to brainstorming business ideas, Sam and Shaan are legends of the game, Watch two cerebral CMOs tackle strategy, tactics, and trends, Everything you need to know about building your business on HubSpot. Instead, it uses the FORECAST.ETS.CONFINT function in combination with the forecast value to calculate the Confidence Bounds, provided the Confidence Interval box is checked in the Options section. Hi Moving Average is one of the many Data Analysis tools for Excel. This has been a guide to Moving Averages in Excel. Simple moving averages 2. Try another search, and we'll give it our best shot. Step 7: Select the Chart Output if you need a chart to show the trend. You can also utilize formulas to calculate the Moving Average in Excel. We provide tips, how to guide, provide online training, and also provide Excel solutions to your business problems. Whether it's to pass that big test, qualify for that big promotion or even master that cooking technique; people who rely on dummies, rely on it to learn the critical skills and relevant information necessary for success. The MA for the five days for the stock X is 148.40. method to forecast F5, F6, F7, F8. As you can see, the formula is almost the same as the formula with the column. To specify that some other number of values be used to calculate the moving average, enter that value into the Interval text box. One year is a common time frame for many business forecasts, but if you expect to experience more volatility, you can use a shorter forecasting schedule, such as quarterly or monthly. Example Two Month and Three Month Moving Average Forecast Step 8:Now, we have results from C2 to C13. Weve published +100 Excel-tutorials on our blog. It gives a chart preview and many options to set the variables as desired. Fall 2020 8000 D3 This method is commonly used to make educated guesses on cash flows, plan budgets, anticipate future expenses or sales, and so on. The Average moving method is widely used in Demand Forecasting, the Prediction of the next value in many fields. Assuming that the values to average are in column B beginning in row 2, the formula would be as follows: =AVERAGE (OFFSET (B2,COUNT (B2:B100)-3,0,3,1)) And By entering your email address and clicking the Submit button, you agree to the Terms of Use and Privacy Policy & to receive electronic communications from Dummies.com, which may include marketing promotions, news and updates. But the moving average is a little bit different here. Firstly excel moving average will calculate the average for the first three months, i.e., Jan, Feb, and Mar month. To specify that some other number of values be used to calculate the moving average, enter that value into the Interval text box.

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    Tell Excel where to place the moving average data.

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    Use the Output Range text box to identify the worksheet range into which you want to place the moving average data. Alternatively, you can select Zeros to treat the missing points as zero values. You want to calculate the three-day moving average the average of the last three days as part of some simple weather forecasting. Ideal for newsletters, proposals, and greetings addressed to your personal contacts. To predict future values using the Exponential Smoothing forecasting model, make sure your data: 2. You assume it will stay the same, but you want to make sure you can still be profitable in case growth slows down. In Excel 2016 and Excel 2019, both functions are available, but it is recommended to use newer FORECAST.LINEAR. . ","noIndex":0,"noFollow":0},"content":"The Data Analysis command provides a tool for calculating moving and exponentially smoothed averages in Excel. From the Excel Options pop-up window, click Add-ins and select Excel Add-ins from the Manage box and then press GO Mark the Analysis ToolPak as Add-ins and click OK. Now go to tab Data -> Data Analysis. Select Moving Average -> OK. Excel places standard error values next to the moving average values. Multiple linear regression means you use multiple variables to predict the number you want to project. May 27, 2023. Simple exponential smoothing 4. Order 3 generally has one or two hills or valleys. Cell D11 holds the moving average of Cell C9, C10 and C11. Depending in your needs, you can choose one of the following methods: Exponential smoothing forecasting in Excel is based on the AAA version (additive error, additive trend and additive seasonality) of the Exponential Triple Smoothing (ETS) algorithm, which smoothes out minor deviations in past data trends by detecting seasonality patterns and confidence intervals. They come together to form a model that can be projected out for the near future. We need to unleash this tool. How many sales will it achieve in 2022? To calculate moving averages for this data set, take the following steps.\r\n\r\n\"image0.jpg\"\r\n

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      To calculate a moving average, first click the Data tabs Data Analysis command button.

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      When Excel displays the Data Analysis dialog box, select the Moving Average item from the list and then click OK.

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      Excel displays the Moving Average dialog box.

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      Identify the data that you want to use to calculate the moving average.

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      Click in the Input Range text box of the Moving Average dialog box. in Excelin Excel in EViews. We can use an inbuilt application for Moving Average, accessed from the Data Analysis option under the Data menu ribbon. Suppose, for sake of illustration, that youve collected daily temperature information. In addition to using financial statements, you can gather this data from tools like your customer relationship management (CRM) software. 5 Stars from me. You can use multiple linear regression to project your shipping costs based on your assumptions about future orders and trends in gas prices. For our sample forecast sheet, Excel has created this formula: =FORECAST.ETS(A31, $B$2:$B$30, $A$2:$A$30, 1, 1). Web#1 Simple moving average in Excel A simple moving average helps calculate the average of a data seriess last number of periods. Theres another technique how you can forecast data for the future through the Exponential smoothing tool of Excel. Theyre also more likely to have more stable growth patterns, which makes it more feasible to project business performance for multiple years. In the worksheet example, the moving average data has been placed into the worksheet range B2:B10. The two regression models are more complicated statistical methods that are easier to conduct with the help of forecasting software. So, youll need to gather the relevant data before you make predictions. Dummies has always stood for taking on complex concepts and making them easy to understand. Thats where tools like financial forecasts come in handy. Merge the months (actual and forecast months) as below. The AVERAGE function automatically ignores text values and empty cells. 35+ handy options to make your text cells perfect. Thanks you so much. Budget forecasts project future revenue and expenses. For Instance, if anyone asks you to provide the moving average of sales value on day 3, you have to give the sales value of Day 1, 2 and 3. A smaller interval indicates more confidence for a specific point. One can calculate MA using the above formula: (150+155+142+133+162)/5. You can use these tools to build cash flow forecasts, profit forecasts, budgets, KPIs, and whatnot. It offers: How can I predict the data of future date range ? The image above shows the sales made over the past 12 months. WebStep 1: Firstly, decide on the number of the period for the moving average. We have not selected the heading, so leave Labels in the First Row check box. For example, lets set it to 01 September 2022. This is Sanjida, an Engineer who is passionate about researching real-world problems and inventing solutions that havent been discovered yet. Set other options as needed, and once done, click Create. 162. (The standard error information goes into C2:C10.). You can also choose to create the forecast in the shape of a bar chart as follows. To calculate moving averages Select the data (or any cell from your data, and Excel would recognize the range itself). 0.95 - the confidence level is equal to 95%. Read More: How to Generate Moving Average in Excel Chart (4 Methods). See pricing, Marketing automation software. But we want to keep the range reference the same as we drag and drop it. Select both data series. Variable x is the sales range. Both of which can cost you thousands of dollars. Learn and get certified in the latest business trends from leading experts, Interactive documents and spreadsheets to customize for your business's needs, In-depth guides on dozens of topics pertaining to the marketing, sales, and customer service industries, Multi-use content bundled into one download to inform and empower you and your team, Customized assets for better branding, strategy, and insights, All of HubSpot's marketing, sales CRM, customer service, CMS, and operations software on one platform. Cash-flow forecasts predict how money will flow in and out of your business. The most commonly used technique is the Simple Moving Average. For startup founders, you can also use cash-flow forecasts to predict the inflow of cash from investors and make sure that funds arrive in time to keep the business running. WebFor moving average on 5 day basis we will use the formula: You can see that moving average become smoother with taking 5 day average. And we want to forecast the sales for the year to come. Labels need to be selected if the input range includes headings. Note how the blue line has sharp highs and lows. Forecasting is a special technique of making predictions for the future by using historical data as inputs and analyzing trends. So, you enter one of the above formulas in any empty cell in row 14, drag it down to as many cells as needed, and have this result: To better understand the future strategies, you can visually represent the predicted values in a line chart. There are three ways how you can apply the moving average method to forecast numbers. My Excel life changed a lot for the better! Is there a way to set the forecast to only include numbers above 0? The future values are calculated with the FORECAST.ETS function, which has the following syntax: For the detailed explanation of each argument, please check out Using FORECAST.ETS function in Excel. Excel creates a line chart to plot the data points for actual and forecast sales. Related Content: How to Calculate Average, Minimum And Maximum in Excel (4 Easy Ways). If your business or industry experiences any big changes, you can always update your predictions. They are especially useful for short-term business planning and preparing for upcoming expenses. Calculate the Moving Average with Data Analysis Tool in Excel (with Trendline) 2. Then calculate the multiplying factor based on the number of periods i.e. While its tempting to keep your tech stack at the bare minimum when youre a new entrepreneur, Lillian Chen, co-founder and COO of the virtual team-building company Bar None Games, recommends using forecasting software to automate the process, saving time and providing more accurate results.. These are most often used when you dont have enough past data to use, such as predicting the performance of a new product line or revenue for a brand-new business. Tell Excel where to place the exponentially smoothed moving average data. ExcelDemy.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program. A forecast sheet created by Excel contains two columns with your original data (timeline series and the corresponding data series) and three calculated columns (forecast values and two confidence bounds). THE CERTIFICATION NAMES ARE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS. See here. New companies, on the other hand, dont have as much past performance data to work with. This article explained how to calculate the Moving Average in Excel with 4 examples. The forecasting function is a data analysis tool you can use in Excel to make predictions about future behavior based on a set of historical data. At this point, its helpful to consider your teams expertise and the software you have available. So, activate a cell in a new column parallel to February (2nd month of our data): 3. Confidence interval can help you understand the forecast accuracy. You can download the free practice Excel workbook from here. Time series has equal intervals (like monthly, quarterly, and annual values). Based on the recent trend, we can make accurate decisions. 5. Moving Averages are used to see a wider picture of how the numbers have been changing over periods. Different moving averages are available, like exponential, variable, triangular, weighted, and simple moving averages. The larger the interval period is to calculate the moving average, the more fluctuations smoothing occurs, as more data points are included in each calculated average. 4. Browse our collection of educational shows and videos on YouTube. Once you have your goal and time frame established, you can choose a forecasting method. A logarithmic trendline can use negative and/or positive values. Naturally, nothing prevents you from building a similar forecasting model yourself by using the following formulas. A linear trendline is a best-fit straight line that is used with simple linear data sets. I earn a small commission if you buy any products using my affiliate links to Amazon. Taking time to review the accuracy of previous forecasts helps you manage expectations and improve the accuracy of future predictions. 1. Do not waste your time on composing repetitive emails from scratch in a tedious keystroke-by-keystroke way. Lets jump into the guide below and learn them all. A wonderful feeling to be amazed by a product, The Ablebits Excel add-in is an absolute must have. However, instead of using the total growth rate, it uses an average of the most recent data to make projections. Then it will leave out Jan for the next average calculation and takes only Feb, Mar, and April month data. Web Moving Average (MA)Moving Average (MA) y Ability to forecastAbility to forecast Account for possible structural breaksAccount for possible structural breaks . Free and premium plans, Customer service software. WebIn the moving averages dialog box: Refer to the cell range containing sales as input values. Fill Missing Points Using - controls how missing points are handled. Go to Insert tab > Charts > 2D Line Chart Icon. 2 / (n + 1). When you fit a trendline to your data, Graph automatically calculates its R-squared value. Winter 2021 3300 D8 )

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      After you finish specifying what moving average information you want calculated and where you want it placed, click OK.

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      Excel calculates moving average information.

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    Note: If Excel doesn't have enough information to calculate a moving average for a standard error, it places the error message into the cell. In the automatically created Forecast Sheet, Excel does not output the confidence interval value. Surprisingly, all of these smart tools/functions are only a small part of the very versatile function library of Excel.. The dataset used is consumption data and therefore cannot go into negative numbers. Go to the plus (+) icon that appears to the right of the chart. Mature businesses have more historical data to inform financial projections. Because we need at least two months of data to calculate 2-months moving average. Check this box if you want Excel to generate a table of additional statistics such as smoothing constants (Alpha, Beta, Gamma) and error metrics (MASE, SMAPE, MAE, RMSE). Download our free sample workbook here to tag along with the guide. Qualitative methods of forecasting use market research and expert judgment instead of numerical data to make predictions. Hit Enter and we the forecasted sales for 01 Jan 2023. All these values are calculated by using the FORECASE.ETS.STAT function. In this article, we will show you how to calculate the moving average in Excel in 4 different examples. Financial forecasting is the process of using your companys historical data and current industry trends to predict your future financial performance. Trusted by business builders worldwide, the HubSpot Blogs are your number-one source for education and inspiration. To check whether the result is really correct or not, we also implemented a generic Average formula among cells C13 to C15 and still got the result 700. I hope this article has been very beneficial to you. You can visit Paul on the web at www.mcfedries.com. by Svetlana Cheusheva, updated on March 16, 2023. Please re-check the article above since it covers your task. Please help me regarding this problem I am new in the "Data analysis". Tags: AVERAGE Formula in ExcelAVERAGE FunctionCOUNT FunctionIF FunctionNA FunctionOFFSET FunctionROW Function. Ultimate Suite is a treasure chest of useful tools, That one program has given me years of convenience, Ablebits is a dream come true for any Excel user, This add-in is really valuable for a very reasonable cost. Communities help you ask and answer questions, give feedback, and hear from experts with rich knowledge. Step 3: Select the chart to Layout > TrendLine > More Trendline Options. The type of data you have determines the type of trendline you should use. In the worksheet example, for example, you place the moving average data into the worksheet range B2:B10. Excel offers an in-built tool to calculate moving averages in Excel. Excel draws an orange linear trendline for the forecast sales. Step-1: Open the Excel sheet and then follow the below options as; Click on Data option in excel sheet. We have set it for 6 upcoming months (until July 2023). This forecasting method is best suited for non-linear data models with seasonal or other recurring patterns. In your Excel worksheet, enter two data series into adjacent columns: It is important that your time series have equal intervals between the data points. With the dataset shown below, we will calculate the moving average of Sales at the interval of 3 with Excels Data Analysis Tool. Winter 2020 4000 D4 Accurate business forecasting can help your business progress much faster than ever. The average of the second and third data points is used as the second point in the trendline, and so on. In the following example, an exponential trendline is used to illustrate the decreasing amount of carbon 14 in an object as it ages. on 03-02-2023 09:45 AM. Your data is linear if the pattern in its data points resembles a line. To the bottom, there is an option to set the forecast end date. By default, Excel uses the most recent three values to calculate the moving average. For now, let's focus on a liner forecast example. Even though it is an in-built tool, it is not readily available to use and experience. (Optional) Indicate whether you want standard error information calculated. These books include Alexa For Dummies, Amazon Fire TV For Dummies, and Cord Cutting For Dummies. Address: Smosevej 17, 2740 Skovlunde, Denmark. 2023 - EDUCBA. 1. For this, select the input range and the output cell; this will automatically return the smoothened moving average data. 5. Theres so much more to Excel that youd love to explore. You want to calculate the three-day moving average the average of the last three days as part of some simple weather forecasting. Forecasts use real data to predict future performance, and they can help you make more informed decisions about your business. {"appState":{"pageLoadApiCallsStatus":true},"articleState":{"article":{"headers":{"creationTime":"2016-03-26T11:20:03+00:00","modifiedTime":"2021-10-06T15:00:56+00:00","timestamp":"2022-09-14T18:18:41+00:00"},"data":{"breadcrumbs":[{"name":"Technology","_links":{"self":"https://dummies-api.dummies.com/v2/categories/33512"},"slug":"technology","categoryId":33512},{"name":"Software","_links":{"self":"https://dummies-api.dummies.com/v2/categories/33618"},"slug":"software","categoryId":33618},{"name":"Microsoft Products","_links":{"self":"https://dummies-api.dummies.com/v2/categories/33642"},"slug":"microsoft-products","categoryId":33642},{"name":"Excel","_links":{"self":"https://dummies-api.dummies.com/v2/categories/33644"},"slug":"excel","categoryId":33644}],"title":"How to Calculate Moving Averages in Excel","strippedTitle":"how to calculate moving averages in excel","slug":"how-to-calculate-moving-averages-in-excel","canonicalUrl":"","seo":{"metaDescription":"Learn how to use Excel to calculate moving averages with this step-by-step guide, including how to generate a chart. Lets make the moving average of these sales to analyze the trend of sales better. by Svetlana Cheusheva, updated on March 16, 2023 The tutorial shows how to do time series forecasting in Excel with the built-in Forecast Sheet feature and your The first step of the forecasting process is determining what you hope to achieve. Here we discuss its types and how to calculate moving averages in Excel, along with Excel examples and a downloadable Excel template. Enter on Data Analysis option. Median, Max or Min. You will get the moving average of sales value for the 3 specific products of that cell and the above 2 cells. If you dont have a background in statistics, its easier to start with simpler methods like straight-line or moving averages. The default option is the average, but you can pick any other calculation method from the list, e.g. Notice that the R-squared value is 0.9036, which is a good fit of the line to the data. The power trendline clearly demonstrates the increasing acceleration. When you want to add a trendline to a chart in Microsoft Graph, you can choose any of the six different trend/regression types. may think of a moving average for forecasting stocks or investments. After you finish specifying what moving average information you want calculated and where you want it placed, click OK. Excel calculates moving average information. Some other mind-blowing functions of Excel include the VLOOKUP, SUMIF, and IF functions. Forecast the next four points, i.e., Spring, Summer, Fall, and Winter of 2022. One of the most common examples of financial forecasting is sales, or revenue, projections. 9. If your Excel is not showing this Data Analysis Toolpak, follow our previous articles to unhide this tool. Once your current forecast period ends, its time to create new projections. 6. 5. Say you want to forecast shipping costs for the next quarter. Date # of shoes sold Forecasting makes a crucial element of every business. Instead of building formulas or performing intricate multi-step operations, start the add-in and have any text manipulation accomplished with a mouse click. Type your response just once, save it as a template and reuse whenever you want. For more information, check out our, How To Conduct Financial Forecasting for Your Business, Subscribe To The Hustle: Your 5-Minute Business & Tech News Brief, Pop up for SUBSCRIBE TO THE HUSTLE DAILY NEWSLETTER, See if youre on track to meet budget goals, Determine if your budget goals are reasonable, Estimate the financial impact of an external trend, such as changes in interest rates, Project income and revenue as part of a presentation for stakeholders and potential investors, Make financial decisions such as choosing between different investments or strategies, Predict upcoming expenditures to understand how long you can keep operating with current investments. In Excel 2013, 2010 and 2007, only the FORECAST function is available. Step 4: Select the sales data from B2 to B13 for Input Range. Click Okay, and there you have the moving averages calculated. To calculate the weekly moving average, we must first find the average of 7 days, starting from the first day. Next, calculate the average of 7 days from day 2 nd to day 8 th and use this data. To do this, you can use the AVERAGE function with relative references. z o.o. I wouldn't be able to do my job without Ablebits! You must be feeling like a statistician by now. In the formula, n represents the number of periods to use to calculate the exponential moving average. (1976). If you want, you can display this value on your chart. For example, you may say that the goal of your forecast is to: Understanding your end goal or purpose will help you figure out what financial metrics you want to predict. This video explains how to execute forecasting using a Moving Average Model. Lets not wait anymore and dive right into each of these smart techniques. In Example 1 of Simple Moving Average Forecast, the weights given to the previous three values were all equal.We now consider the case where these weights can Mail Merge is a time-saving approach to organizing your personal email events. In theory, your time series can miss up to 30% of data points or have several entries with the same date or time, and Excel will still do the forecast correctly. Step 1:I will take the same data as above. To have a closer look at the examples discussed in this tutorial, you are welcome to download our Excel Forecast Sample Workbook. The moving average for every two months sales. That is how you can forecast statistics (for any period) using the exponential smoothing tool of Excel. It should match the Timeline Range. You cannot create a power trendline if your data contains zero or negative values. Values Range - the range used for your value series. Select 3 columns of data: time series, historical data values and forecasted values. So if we calculate the moving average for our dataset then the formula will be. The default level is 95%, meaning that 95% of future points are expected to fall within the range. The first 2 cells show #N/Abecause we have selected the interval as 3 from the 3rd cell onwards; we have results. Identify the data that you want to use to calculate the moving average. This includes the future values for sales, and lower and upper confidence intervals. Predicting both your earnings and expenses helps determine whether or not your business budget is reasonable and monitor if youre on track to stay within your goals. Drag and drop the same to all the forecast months. This makes it easier to study the trends over a given period. WebThis tutorial demonstrates the calculation and interpretation of moving average forecasts for 5-week and 10-week look-backs. In statistics, there exist many different forecasting techniques and some of these techniques are already implemented in Excel. We are making a two-months moving average so the first average would be calculated at the end of month 2. (The standard error information goes into C2:C10. 6. Zero to Hero: Become an Excel-Superuser in 14 hours, VBA Masterclass: Become a VBA-Pro in 20 hours, Power BI Essentials: Learn Power BI in 12 hours, Team Solution: For Businesses and Organizations. We have set it to D2 (that contains the first date i.e. An absolute cell address precedes the column letter and row number with $ signs, as in $A$1:$A$10. Trendline reliability A trendline is most reliable when its R-squared value is at or near 1. Here's how our Excel sales forecast looks like: To find out how the predictions are calculated, click on one of the future values in your forecast worksheet and investigate the formula. This takes you to the Create Forecast Window. We have already seen how moving average works with the simple sales data series. Comparing measures of forecast error between models 3. Step 3:It will open a Data Analysis dialog box. Well, let's do linear forecast with one of these formulas: =FORECAST.LINEAR(A14, $B$2:$B$13, $A$2:$A$13). Being a programmer and a constant solution seeker, made me interested in assisting the world with top-notch innovations and evaluations of data analysis. In the Interval text box, tell Excel how many values to include in the moving average calculation. Drag and Drop this formula to the whole list. Step 5: Now, the chart has a moving average line. The Moving Average Forecast formula is as follows: where, F t = Forecasted demand for period t. A i = Actual Demand for period i. X = Number of periods in the moving average. These books include Alexa For Dummies, Amazon Fire TV For Dummies, and Cord Cutting For Dummies. It will give you the moving average of the last 3 values in a column. See the picture above where we got the moving average, 700, of the last 3 values (Cell C13, C14 and C15) of Column C of our dataset. Calculating moving averages in Excel is very simple and easy. As the cell references were not absolute but only relative, the cell references change for each next average. Published: 1. By signing up, you agree to our Terms of Use and Privacy Policy. 7. 6. Out-of-sample validation 1. Click in the Input Range text box of the Moving Average dialog box. Financial modeling projections are often based on your past performance. Here is the sales data for one year. Go to Data Tab > Analysis > Data Analysis. However, it is recommended to summarize your data to get more accurate predictions. 3 as we declared the interval value 3. Forecasting is the technique to estimate future trends based on historical data. Financial forecasting is an essential tool that helps you stay on top of your companys performance and identify risks early on so you can address them right away and get the most out of your capital. We're committed to your privacy. You can visit Paul on the web at www.mcfedries.com.

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