Math Tools For Journalists Part 2

By Megan Wanner

As reporters, we are exposed to many polls and surveys taken as a way to gage what the population is thinking about any number of issues or topics that arise.  It is the reporter’s job to assess the validity and accuracy of these polls and surveys in order to articulate that to their readers.

Polls “are an estimate of public opinion on a single topic or question.”  Random selection is an important factor in taking polls as this means everyone in the population being studied has a chance at being selected.  As researchers cannot survey a whole population, random selection helps their sample group to be as representative of the population as possible.

Margin of error is the “degree of accuracy of the research based on standard norms.”  A confidence level indicates how confident researchers are in their results or “the probability of obtaining a given result by chance.”.  As the margin of error increases, the confidence level increases.  Reporters should be sure to include both margins of error and confidence levels in stories in order to give readers the opportunity to review the results themselves.

One of the most widely known surveys in America is the U.S. Census.  The results obtained during the Census are used to generate congressional districts proportional to the population.

Trey surveyed 50 people about their reactions to President Obama’s first 100 days.  Out of the people polled, 87 percent replied favorably towards Obama.  The margin of error for a survey of 50 people at the 95 percent confidence level is 13.9 percent.  What is the range of favorable opinion towards Obama’s first 100 days?

(87 % + 13.9 % = 100.9%) (87% – 13.9% = 73.1%)

Between 73.1 percent and 100.9 percent.

Reporting a business beat typically includes the ability to not only report numbers, but calculate them as well in order to report on financial statements, assets, equity, gross margin, profit, liabilities and other financials. 

Profit and loss statements are different for every business, but essentially calculate the profit by subtracting expenses from income.  Expenses include “cost of goods sold” referring to “direct expenses a business incurs in making or buying its products” and “overhead” referring to “expenses not directly related to the product being made, including salaries of employees, rent, utilities, insurance, etc.”  “Gross margin” is the difference between the “cost of goods sold” and the selling price.

When comparing companies, it is useful to calculate each of their EBITDA “because it shows how much cash a company is earning without regard to items unrelated to current business.  EBITDA stands for “earnings before interest, taxes, depreciation and amortization.”

Analysts and business owners use ratios on a regular basis to assess financial situations of companies.  Among these ratios are current ratios, quick ratios, debt-to-asset ratios, debt-to-equity ratios, return on assets, return on equity and price-earnings ratios.

Todd owns a muffin shop where he pays $1.35 for each muffin and sells them for $1.75 each.  What is his gross margin?

Gross margin = Selling price – cost of goods sold

$.40 = $1.75 – $1.35

If Todd sells 150 muffins per day, what is his gross profit per day?

Gross margin x Number of items sold = Gross profit

$.40 x 150 = $60

In order to rent his shop, Todd pays $100 per month, overhead expense.  What is his net profit for a month?

Gross margin – Overhead = Net profit

($60 x 30 days) – $100 = $1700

Companies sell stocks and bonds in order to raise money.  People buy stocks as investments and become a small part owner of the company.  A bond is “a loan from an investor to the government or other organization selling the bond.”

Market indexes are used to track prices of groups of stocks allowing investment analysts to measure overall market conditions.  Two of the most popular indexes are the Dow Jones Industrial Average, “the total value of one share each of 30 select stocks divided by a figure called the divisor, and National Association of Securities Dealers Automated Quotations (NASDAQ), “an automated quotation system that reports on trading of domestic stocks and bonds not listed on the regular stock markets.”

Ted paid $1,500 for a $1,800 bond with an 8 percent interest rate.  What is his current yield?

(Interest rate x Face Value) / Price = Current Yield

(8% x $1,800) / $1,500 = 9.6 %

Property taxes are a large source of income that local governments, school districts and other community organizations use to pay for day-to-day expenses.  Property tax rates are determined by dividing the total amount of money the governing body needs among the property owners in the tax district.  They are measured in units called mills, which are each one-tenth of a cent.

Property taxes are applied to assessed valuations, a percentage of market value.  Reappraisals are key in updating real property values to reflect current market values.

Appraisal values are based on the property’s use, its characteristics, current market conditions determined by recent sales in the immediate area and visual inspection of the property.  The assessed value of a property is based on local policies including credits and other adjustments.

Residential property is assessed at 40 percent of the appraised value.  The house is appraised at $180,000.  What is the assessed value of the house?

Assessed Value = Appraisal Value x Rate

$72,000 = $180,000 x .40


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