Math Tools for Journalists, Chapters 5-8

By Hannah Benson

From covering the political race between mayors in your local city to including in your article the sum of a company’s losses in the last year, journalists must embrace the (pretty digestible) formulas that come with covering businesses, politics and government in the modern day.

Polls and Surveys

Part of being a reporter who receives all of the poll and survey updates (and is expected to write aTYPES OF.pngbout them) is being able to understand the validity of these studies on public opinion.

When figuring out how reliable a poll or survey is, it’s important to understand the process of random sampling — that disqualifies polls in which people are self-elected as participants of the survey, these are seen as unethical.

From Census sampling where everyone in the population is included, to cluster sampling by zip code or systematic random sampling, pollsters use a variety of methods to select participants and collect information to determine data.

The margin of error of a study reveals how accurate the data collected is compared to standard norms for studies like it. It is cited as a percentage and based on the number of people polled to create the sample. Thus, the more people surveyed in a study, the more accurate the data and the smaller the chance is for error.

Confidence level is the percentage at which researchers and experts are confident of the accuracy of their research in the study they have conducted. The levels usually fall at 90, 95 or 98 percent. Always report this figure in the story to allow readers to make their own judgment on the reliability of the survey or poll. Doing so is an ethical and reasonable practice, you owe your readers this.

Example problem 1

After a random poll was conducted on about 400 residents to find their opinions of two candidates for mayor, results show that 44 percent were in favor of candidate A, 51 percent were in favor candidate B and 5 percent said they would write in a candidate or not vote.  The confidence level was 95 percent. Is it safe to say that candidate B is trailing ahead of candidate A and leading the poll?

Margin of error for sample size of 400, 95% confidence level: 4.9

44 + 4.9 = 48.9

51 – 4.9 =  46.1

With the margin of error at 4.9, the results could be potentially 48.9% to 46.1%, in favor of candidate A. Thus, it’s not safe to say that candidate B is leading the poll.

Business

One of the most important pieces of information about a company (especially a company in which readers are shareholders) is whether it’s making money. A profit and loss statement, or P&L, tells us just that.

Gross margin = selling price – cost of goods sold

Gross profit = gross margin  x  number of items sold

Net profit = gross margin – overhead

Assets = liabilities + equity

Assets are all of a company’s real estate, cash, equipment for production, etc. Liabilities are money the company owes, and a company’s equity is what it is actually worth after everything.

Example problem 2

You just started your own home-based small business. Right now, you have $12,400 in assets and $3,350 in liabilities. How much equity to you have?

Assets – liabilities = equity

12,400 – 3350 = 9050

Currently, your small business has $9,050 in equity.

Stocks and bonds

Stocks allow many individuals to become shareholders within companies, each share being a very small portion of ownership, but regardless a portion of the entire corporation.

A bond is a loan from an investor to the organization selling the bond. Investors earn a set interest on the bond, which is usually a low-risk investment. The bond’s face value is how much the investor will receive at maturity. Sometimes investors sell bonds on the market before they have fully matured, as in the example below:

Current yield = (interest rate  x  face value) ÷ price

Example problem 3

You paid $925 for a $1,250 bond. With a 5 percent interest rate, what is your current yield?

(.05  x  1,250) ÷ 925 = .0675 or 6.75%

Two years later, you buy a bond with the same face value and interest rate, but pay $1,100. What, then, is your current yield?

(.05  x  1,250) ÷ 1,000 =  .057 or 5.7%

Property taxes

Property taxes are measured in mills, a unit that is 1/10 of a cent ($0.001).

Mill levy = taxes government collects ÷ assessed valuation of all property in taxing district

Example problem 4

Your town’s budget is $840,300 for the upcoming year. If the sum total of the assessed value of property is $102,450,800, what will the tax rate be?

840,300 ÷ 102,450,800 = .0082 or 8.2 mills

That means $8.20 per $1,000 assessed valuation.

Assessed value = appraisal value  x  rate

The appraisal value depends on the type of property and its use (commercial, business, residential, etc.), location, quality of construction, amenities, square footage and other characteristics of the property.

 

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