What is 'Back-Of-The-Envelope Calculation'
An informal mathematical computation, often performed on a scrap of paper such as an envelope. A back-of-the-envelope calculation uses estimated and/or rounded numbers to quickly develop a ballpark figure. The result should be more accurate than a guess, but will be less accurate than a formal calculation performed using precise numbers and a spreadsheet or calculator.
Explaining 'Back-Of-The-Envelope Calculation'
Back-of-the-envelope calculations might be used to determine whether further research and more detailed calculations are warranted. For example, an investor might look at a company's annual report and do a back-of-the-envelope calculation to get its price-to-earnings ratio. If it is low enough to imply value, the investor can do a proper calculation which might include factoring in the weighted average shares outstanding for the year. If the quick estimate gave a high P/E ratio, time could be saved.
Further Reading
Dynamic scoring: A back-of-the-envelope guidewww.sciencedirect.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
Household balance sheet channels of monetary policy: A back of the envelope calculation for the Euro Areawww.sciencedirect.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
The cost of basic income: Back-of-the-envelope calculationswww.degruyter.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
The impact of food inflation on urban poverty and its monetary cost: some back‐of‐the‐envelope calculationsonlinelibrary.wiley.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
'Back of the Envelope': Pragmatic Planning for Sustainable Rural Community Developmentwww.tandfonline.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
The economics of traffic congestionwww.jstor.org [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
Grazers: the overlooked threat to the sustained production of future algal biofuelswww.tandfonline.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
What's wrong with the back of the envelope? A call for simple (and timely) benefit–cost analysisonlinelibrary.wiley.com [PDF]… 2. These formulas permit some illuminating back-of-the-envelope calculations … suggests a (constant-consumption) compensated elasticity of labor supply around 3. 6 If we raise σ to 3 in our calculation, the revenue … The only equation that comes from household behavior is Eq …
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