## The Abridged Math Tools for Journalists: Wickham Briefing chpts. 5-8

By Julia Sayers

**Polls and Surveys**

Journalists use polls and surveys as important supplemental elements to their work. Polls are the public’s opinions on a single question or topic while surveys are the public’s opinions on a series of questions. In order to do a survey, ideally researchers would like to interview every person in the population but that is not possible so they often rely on samples. There are many different ways to get a sampling. Cluster sampling involves surveying a specific group, such as students enrolled in a class. Systematic sampling involves choosing a number, such as seven, and then calling every 7th person in the phone book. Probability sampling involves putting all subjects into a hat and then drawing out a particular percentage. These are just a few ways sampling can be done. Two important terms to understand are margin of error and confidence level. Margin of error indicates the degree of accuracy of the research based on standard norms. It is expressed as a percentage based on the size of the sample. The more people polled, the smaller the margin of error. Confidence level is the level or percentage at which researchers have confidence in the results of their research. Confidence level is determined in advance and varies from field to field.

Journalists should also understand z scores and t scores. A z score shows how much a particular figure differs from the mean. It is used to compare figures that are hard to compare in raw form. The formula for a z score is: (raw score – mean) / standard deviation. The t score is used when the sample size is smaller than 100.

**Business**

The business beat in reporting involves the most math of all beats. Sources come from things like press releases, financial statements, quarterly earnings reports and annual reports. Profit and loss reports are some of the most important documents for a company. They show if the company is making money. They do this basically by subtracting expenses from income. The difference between costs of goods sold and selling price is the gross margin.

**Example 1**

The cost of making a pair of jeans for a company is $30. However, they sell the jeans for $70. What is their gross margin?

**Gross margin = selling price – costs of goods sold
70-30 = $40 gross margin**

However, this is not the total profit for the company, since other things must be figured in like overhead and all the other expenses of the company.

Other important formulas:

Gross profit = gross margin x number of items sold

Net profit = gross margin – overhead

Assets = Liabilities + Equity

If you have the facts, the formulas are easy to fill in and figure out.

Ratios are also important for business reporting. The most popular is the current ratio, which is found by dividing current assets by current liabilities.

**Example 2**

A soda company has $205.3 million in current assets and $194.6 million in current liabilities. What is the current ratio?

205.3 million / 194.6 million = 1.05

**A ratio of 1.05 means the soda company has $1.05 in assets for each dollar in liabilities.**

Other ratios formulas:

Quick ratio = cash/ current liabilities

Debt-to-asset ratio = total debt / total assets

Debt-to-equity ratio = total debt / equity

Return on assets = net income / total assets

Return on equity = net income / equity

Price earnings ratio = market price or share / earnings or share

**Stocks and Bonds**

Stocks are an important part for all corporations, and sometimes individuals. Corporations make money by selling stocks and when an individual buys stock in a company, they become part owner in a company. The more popular a stock is, the higher the price is. Corporations also make money by selling bonds, which is similar to a loan from an investor to the government or other organization. They earn low-rate interest and are low-risk investments. Until the bond reaches maturity, the owner will annually get the interest. When the bond reaches maturity, the owner will often get the face value he paid for the bond. However bonds fluctuate on the market, so in turn the current yield (return on the bond) does too. Many reporters are interested in calculating the cost of a bond issued by a municipality. This can be done by the formula: Bond cost (interest) = amount x rate x years.

**Example 3**

The town of Hickory, NC decided to issue $7 million worth of 15 year bonds to pay for new parks. If the coupon is 5%, how much will Hickory have to pay in interest over the life of the bonds?

**Bond cost = 7 million x .05 x 15
Bond cost = 5.25 million**

Journalists might want to explain to readers that this means $12.25 million will go to the new parks.

**Property Taxes**

Property taxes are the largest source of income for local government, school districts and other municipal organizations. The property tax rate is determined by taking the total amount of money the governing body needs and dividing that among the property owners in that taxing district. The amount each owner pays depends on the value of his property. Property taxes are expressed in mills, 1/10 of a cent. Key things to remember when writing about property taxes is the reappraisal value, taxes imposed by other governing bodies and the type of the property, as many are assessed differently. Appraisal value is based on the use of the property and the characteristics, such as location, square footage, age, quality, amenities, etc. To find the assessed value of a property, multiply the appraisal value by the rate. To calculate tax on a property, use the formula: tax owed = tax rate x (assessed value / $100). If the amount is assessed by amount per 1000, divide by 1000 instead of 100.

**Example 4**

Hickory is raising its local property tax from 65 cents per $100 to 77 per $100. How much more will the owner of a $350,000 house pay next year if the assessed value is based on 20% of the appraised value?

First you must find assessed value.

350,000 x .20 = 70,000

Then use the assessed value to find the taxes paid at the old rate and at the new rate.

Old rate taxes paid = .65 x (70,000/100)

Old tax = $455

New rate taxes paid= .77 x (70,000/100)

New tax = $539

To find out how much more the owner is paying, simply subtract the old rate from the new rate.

539 – 455= $84

**So the homeowner will pay $84 more dollars in taxes next year.
**

[All credit goes to Kathleen Woodruff Wickham]

Everyone in journalism has to have a good underpinning in this information, so these chapters were important background for you to brief and learn.

Your attention to detail in learning and summing up these “Math Tools” concepts will continue to serve you well over the years. KEEP the “Math Tools” book as a reference for yourself for when you ever have to refresh this information in your mind!

JannaApril 29, 2011 at 12:58 pm