By Matt Holzapfel
This part of the Abridged Math Tools for Journalists Series will be focused on Chapters 5-8 of the book “Math Tools for Journalists” by Kathleen Woodruff Wickham.
Chapter 5: Polls and Surveys
“Polls and surveys are as much a part of the American landscape as elections and Fourth of July parades.” Dramatic? Sure, but not necessarily untrue. Polls and surveys offer a glimpse of public opinion, though they are often skewed one way or another. It is the reporter’s job to help readers understand the validity of the polls and surveys that they are reading about.
Polls are an estimate of public opinion on a single topic or question, and they are most commonly used in political circles. Some basic things to consider when thinking about the validity of the poll:
- The name and background of the pollster or polling organization
- Who paid for the poll
- How and when the poll was conducted
- The exact wording of the questions
- The size of the sample and the response rate
- The method used to select the sample
- The margin of error
- The relationship of the poll to any news event that might have an effect on the results
There are several methods for selecting sample groups for polls and surveys, among those are census (sampling everyone in a population), cluster (sampling in one area or region identified by ZIP codes, counties or other well-defined areas), multistage (selecting a geographic area, then randomly selecting sub-groups), systematic random sampling (selecting a specific number, ex: 10, then taking every 10th person from a phone book or directory and polling them), quota (select the sample based on known demographic characteristics), and probability (putting all of the potential subjects in a hat and drawing out a designated number).
Next, we must consider margin of error. The margin of error indicates the degree of accuracy of research based on standard dorms. The more people polled, the smaller the possible error, and the smaller margin of error. Another thing to consider is confidence level, which is a bit more complicated than margin of error but goes right to the heart of accurate reporting. Confidence level is be defined as the level, or percentage, at which researchers have confidence in their results. The formal definition is the probability of obtaining a given result by choice. Another thing that journalists must be knowledgeable about is z-scores and t-scores, z-scores are also called “standard scores”, and they show how much a particular figure differs from the mean. The formula for z-score is (Raw score – mean)/Standard Deviation. T-scores are similar, but slightly more complicated, for more information on t-scores, click here.
Practice Problems: Pick the correct term to use in each sentence
- (Census/Cluster) sampling involves sampling everyone in a population.
- (Multistage/Systematic random) sampling involves picking a random number and using a phone book or directory or similar item to poll every Xth person.
- (Quota/Probability) sampling involves putting all of the potential subjects in a hat and drawing out a designated percentage.
Chapter 6: Business
Business news is often big news, and few beats contain as much math as the business beat. Some examples of business news are press releases, quarterly earnings reports, and annual reports. Financial statements are formal documents that are available to shareholders, regulatory agencies and other stakeholders interested in a company’s performance. These documents include quantitative statements about a company’s business transactions. Profit and loss statements show whether or not a company is making money. A business has many different expenses. The phrase “cost of goods sold”
refers to the direct expenses a business incurs in making or buying its products. “Gross margin” is the difference between the cost of goods sold and the selling price. Next, there are balance sheets, sections that appear on balance sheets are listed to the right. Next, there is a formula called “current ratio”. Current ratio is found by taking all the current assets and dividing them by all the current liabilities. Current ratio measures the ability of a company to meet (pay back) its liabilities. Other formulas in this chapter are 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), and price-earnings ratio (market price per share/earnings per share).
- What is the formula for Return on Equity? Return on Assets?
- If Tag Media has $57 million in cash and $102 million in current liabilities, what is the company’s Quick Ratio?
- If you want to know how deeply a company is leveraged by comparing what is owed to what is owned, which formula should you use?
Chapter 7: Stocks and Bonds
Stocks and bonds are two important ways that businesses raise money. Bonds are often used by the government to raise money. Understanding the basic numbers behind these “cash-raising instruments” is important for a journalist. Stocks are sold by corporations who want to raise cash. People buy stocks when they want to invest in a company. When someone buys a stock, they become a part owner of the company, since so many shares of stocks are sold, however, each share represents only a tiny portion of ownership. Corporations and governments raise money by selling bonds. A bond is basically a loan from an investor to the government or other organization selling the bond. Bonds earn interest at a set rate and are generally low-risk investments. The “face value” of the bond is the amount the owner of the bond will receive at maturity. The catch on bonds is, investors often sell bonds on the open market before they mature and even though the face value and interest rate remain the same, the value of the bond on the open market fluctuates with supply and demand. As a reporter, you may be more interested in calculating the actual cost of a bond issued by a municipality. (Bond cost = amount x rate x years).
- Are stocks owned or loaned?
- T/F: Bonds are high-risk
Chapter 8: Property Taxes
Property taxes are the largest single source of income for local governments, school districts, and other municipal organizations. They pay for supplies, salaries, maintenance costs, and just about every other day-to-day expense there is. Articles about property taxes often make the front page, understanding how property taxes often make the front page, and how understanding how property taxes are calculated is important for journalists. 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 the taxing district. How much each owner pays is based on the value of his/her property. The first kind of tax is a Mill levy. To find the Mill levy rate, divide taxes to be collected by the governing body by assessed valuation of all property in the taxing district. To find appraisal value, we must consider the property’s use, characteristics including location, square footage and the number of stories, and current market conditions as determined by sales in the immediate area over a specific number of years. The assessed value of a property depends on local policies which can mean credits and other adjustments. The formula for assessed value is appraisal value times rate. Lastly, to calculate tax owed, we multiply tax rate by (the assessed value of the property/$100).
- What is the formula for assessed value?
- T/F: Property taxes are the largest single source of income for local governments
Answers to Practice Problems:
Chapter 5: 1. Census 2. Systematic Random 3. Probability
Chapter 6: 1. Net income/Equity and Net income/Total assets 2. 0.559 3. Debt-to-equity ratio
Chapter 7: 1. Owned 2. False
Chapter 8: 1. Appraisal value x rate 2. True