Indexing/Intermediate

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LEONa
LEONa Registered Posts: 4 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
For the more mathematically minded, can anyone tell me whether I am right in thinking that in calculating index numbers (factors), you are simply calculating the percentage increase of each year (for example), against the base year, hence the value of the base year is always 100?

Also, when you have been given a sales figure, for example, and an index factor which related to a base figure of 100, being the value of the index in the base period in 2002, e.g. sales figure 1220, index factor 147.3, what is the formula to arrive at the indexed total, and any suggestions or tips how to easily remember it!

Addit:confused1:

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  • kjg-kj
    kjg-kj Registered Posts: 68 Regular contributor ⭐
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    We always got taught 'divide by where you are, times by where you want to be'.

    Ie:
    Year Sales Index
    2002 £10500 141.2
    2003 £12607 154.5
    2004 £13024 161.3
    2005 £17958 168.8

    If you were to calculate the 'real' 2005 sales figures (by removing inflation) at the 2002 level, you would divide the £17958 'by where you are' (by 168.8) and 'times by where you want to be' (multiply by 141.2). This gives you a figure of £15021 which is the 'true' value after taking out inflation, not the £17958 that is at current prices.

    Hope this helps
  • LEONa
    LEONa Registered Posts: 4 New contributor 🐸
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    Indexing

    Thank you for your help - I find phrases which sum up succinctly what you are supposed to do very helpful and memorable. Thanks. :thumbup:

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