Re: Index vs % by joeu2004
joeu2004
Sat Mar 15 10:59:03 CDT 2008
On Mar 15, 7:00=A0am, "goldco...@mac.com" <goldco...@mac.com> wrote:
> What's the difference between an index and percentage growth/decline?
It is largely semantics. But it affects how you use each number in
formulas
> Example: Last year's volume was 158 vs 2006's volume of 97. If I
> divide 158 / 97 I get 162.9.
No, you get 1.629 (rounded). Apparently, you chose to multiply by 100
to get your index. That is an arbitrary choice, albeit a common one.
> Isn't that the same as 62.9%?
Well, 62.9% is derived from that. Specifically, 158/97 - 1, formatted
as Percentage.
> Why would I use one over the other
Percentage growth can be negative as well as positive; some people
have trouble dealing with that. For example, if the 2007 volume had
been 36, you would have a "growth" of -62.9% (rounded). Of course, we
say "loss", not "growth". When growth goes from 63% to 126%, it
doubled; similarly when loss goes from -63% to -126%. But what if the
loss goes from -63% to 63%? (Rhetorical.)
In contrast, an index is never negative, at least when we are talking
about volume and other counting numbers that cannot themselves be
negative.
> and if I decide I don't want it to read 162.9,
> just 62.9, how do I get that to happen?
Just as the index was computed by 100*(158/97), you could compute the
"percentage" by 100*(158/97 - 1).
But I prefer to use 158/97 - 1, and format it as percentage.
Otherwise, you always have to remember to divide the "percentage"
figure by 100 when you use it aritmetic formulas.