The Definitive Guide to Business Finance: What smart managers do with the numbers, Second Edition

Interesting growth rates

Watch those digits

Percentages need careful watching:

• If you boost sales by 10% a year for 10 years, the overall increase will be 160%, not 100%.

• If you boost prices by 50%, and then cut them by 50%, they end up 25% below where they started from.

• If your credit card company charges you 3.5% a month interest, this grosses up to a penal rate of over 50% per annum.

Of money, percentages and proportions

We are all familiar with percentages and proportions from everyday dealings with money. Nevertheless, I am going to state the obvious:

• Proportions. One cent is 0.01 of a dollar.

• Percentages. One cent is one percent (1%) of a dollar.

If something grows by x%, it has to shrink x / (x + 100) to return to the starting point.