Thread: Percentage Growth / Weighing Function

One of my collegues at work came up with this formula to weigh the growth of a product. Here is the equation: ((CQTY Market Percent)/((CQLY Market Percent * .4) + (MATLY Market Percent * .6)) * 100.

MATLY = moving annual total last year Apr 2003 - Mar 2004)
CQTY = current quarter this year (Jan - Mar 2005)
CQLY = current quarter last year (Jan - Mar 2004)

He told me that this equation would remove the highs and lows of the market and would be a better indicator of how the product is performing. I am not convinced. I don't understand how exactly he formulated this equation and whether it is logically sound. We want to create a mechanism by which we can guage the performance of a product in respect to it's market share. Want to compare the CQTY market share with a longer time period. So we can understand whether the product is actually growing or just in a cyclical high. Does this make sense? I am in dire need of some math tutoring.

Hope that I can help, just need some further explanations.

Can you please further explain what MATLY is?

MATLY = moving annual total last year. The moving annual total this year would be this month (april) going back one year. The moving annual total last year would be april 2004 going back a year. It is the total sales for each month going back one year

Thanks,

Vijay Bala

So moving annual is the sum of the previous 12 months at any given month?

yes that's correct

Normally products are cyclic on an annual basis. Does this product have different highs and lows that are not related to the calendar? Or at least not on a 12 month cycle?

The best way to comapare may not be April to April especially if you had a 10 month cycle.

the formuala you have posted seems to be arbitrary with the 40 60 percent thing.

Give us some info about the product.

Yes the product's highs and lows are contained within a calander year.

Then what is wrong with just comparing April to April? If highs and lows follow the cycle of the calender year then they should not affect your growth in market share when compared month to month.

What my boss said:

You can assume that the CQLY (not CMQLY) can be 20% and the rest of the year went up to 80% hence you would have something like 80/(48+8)= 1.428. or a 42% percent weighted growth. Now typically the calculate the figure comparing CQLY to CQTY, which would be extremely inflated number 80/20= 400% growth, or they may use CQTY to LQTY, which will throw strange numbers every quarter. Also you can do the same calculation based CQTY to Last six month average.


Basically there are many different ways to calculate this, it all depends on client’s comfort level. I hope this helps you out.