Understanding ratios is vital to unlocking deeper insights into your corporation’s well being and driving smarter decision-making
Think about you’re a farmer with two apple orchards. At some point, you determine to depend the apples in every orchard. Orchard A has 1,000 apples, whereas Orchard B has solely 500. At first look, it looks as if Orchard A is the clear winner. However what if I informed you that Orchard A has 10,000 timber, whereas Orchard B has solely 500? Instantly, Orchard B doesn’t look so dangerous, does it?
That is the ability of proportions. In enterprise, as in farming, uncooked numbers may be deceiving. To actually perceive the well being of your corporation, you might want to take a look at proportions.
You’re most likely absolute numbers each day, e.g. your corporation has made $10K in income this week. There are 250 clients who positioned orders at this time, whereas it was 200 yesterday and 100 on the identical day final week and many others.
Proportions, however, are just like the nice print. They may not be as instantly eye-catching as absolute numbers, however they supply a extra correct image of your corporation’s well being.
Take revenue margin, for instance. This can be a proportion that compares your revenue to your income. A excessive revenue margin signifies…
