Absolute vs Relative Measurements

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Results can be expressed in different ways to depict as vividly as possible the message the numbers need to convey.

For example, expenses are expressed in absolute dollars to reflect the magnitude of the cost. Production output is expressed in absolute units to indicate the quantity available for sale. Absolute measurements provide information on volume, size, or magnitude.

Another way to express results is in relative terms. For example, labour productivity is expressed in production units per labour hour to reflect how efficient the workers are. Revenue growth is expressed in change in dollars over time to show how successful the business is in entering new markets. Relative measurements provide a comparative gauge on how well the work has been executed. The information is richer as it offers more context for performance evaluation.

In determining how to express a results, think about the information you need to assess the situation and make better business decisions. Absolute and relative measurements are useful for different purposes.

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