Tuesday, November 04, 2008

Lies , damn lies and statistics

One of the first clients I ever visited when I started training as an accountant was a bookseller. I remember being unable to understand how the clerk had computed his percentages when sales were falling. These included such impossible results as minus 134% and minus 179%.

I explained how to compute the percentage movement in sales from one period to another. The look of joy on the clerk's face was a delight as he came to appreciate a key fact: Whilst upward trends had no limit (eg: increases of four time the previous week's sales would show as plus 400%), downward trends could never be worse than minus 100% (if no sales were made). He was thrilled.

I went back a few weeks later to check all was well. Unfortunately a stack of books (previously counted as 'sold') had been returned thus creating 'minus sales' ...............
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