Ratio
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What is a “Ratio”?
“He who refuses to do arithmetic is doomed to talk nonsense.” — John McCarthy, computer and cognitive scientist who coined the term “artificial intelligence”
Key Points:
- Ratio is the method of comparing two measurements against each other. Divide your results by your input and you can get many useful relationships in your system.
- Tracking Ratios is a great way to see how the system is changing and what direction is taking.
- After running an analysis, it helps to construct Ratios in a creative way to see the most important parts of your system.
Questions for Consideration:
- What ratios could you construct that would make it easy to see relationships between critical parts of your business?
- Which measurements are particularly important to compare? Are they important enough to be KPIs?
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