Paul Butler: Know your numbers and know what they mean

Paul Butler is a Santa Clarita resident and a client partner with Newleaf Training and Development of Valencia (newleaftd.com). The views and opinions expressed in this article are those of the author and do not necessarily represent those of The Signal newspaper. For questions or comments, email Butler at [email protected]
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As a recovering accountant I can grasp the magnitude of a situation when I know the numbers and, most importantly, know what they mean.

Take for example the global COVID-19 pandemic. Yes, the numbers are increasing. Yes, the numbers are concerning, but we also need to know the numbers to better understand their relevance.

At the time of writing, there are 11,304,534 confirmed cases globally (which is 0.0014% of the population of 7.8 billion) with 531,659 deaths = a 4.7% death/case ratio. So, if you are one of the just over 1/10 of 1% who contract it, you have a 95.3% chance of survival globally.

In the United States, there are 2,916,842 confirmed cases (which is 0.0088% of the population of 331 million) with 131,897 deaths = a 4.5% death/case ratio. So, if you are one of the just under 9/10 of 1% who contract it, you have a 95.5% chance of survival here in the States.

Closer to home, in California there are 263,289 confirmed cases (which is 0.007% of the population of 40 million) with 6,333 deaths = a 2.4% death/case ratio. So, if you are one of the 7/10 of 1% who contract it, you have a 97.6% chance of survival in California. (Source: https://google.com/covid19-map/)

Making a point

It feels rather trite to traverse from an update on pandemic statistics to business, but I am using the former to make the point for the latter. By knowing the numbers and knowing what they mean, we can make more informed choices.

In business, it’s the practice of financial accountants to report the numbers. Most commonly, this is done in the form of three primary financial statements. The income statement tells the business what it’s earned (income), what it’s used (expenses) and what it’s made (profit or loss). The balance sheet tells the business what it owns (assets), what it owes others (liabilities) and what it owes the owners as they own the business (equity). The statement of cash flows tells the business where the cash came from and where it went, due to three types of activities — operating, investing and financing.

Financial accounting, therefore, really just keeps score. Relating this to our pandemic stats, the global score is the 11 million confirmed cases with just over a half-million deaths.

Management accountants within a business relate numbers to each other, so they have more meaning. These folks are called “management” accountants because their purpose is to make the numbers more relatable and therefore actionable to influence management’s behavior. Again, relating this to our pandemic stats above, there’s a 4.7% death-to-case ratio and just 1/10 of 1 percent of the world’s population have contracted the disease to date.

My personal conclusion from the numbers is, as heartbreaking as one death is, I believe we have to (a) keep the numbers in perspective while (b) honoring the directive to socially distance and wear masks in public. We can impact the numbers by changing our behaviors.

Keep numbers in context

We must always keep numbers in context, too. As devastating as the COVID-19 pandemic is, the World Health Organization estimates that on average up to 650,000 people die of flu-related causes every year worldwide.

Over in the U.K., my place of birth, there are 263,289 confirmed cases (which is 0.004% of the population of 67 million) with 44,220 deaths = a 16.8% death/case ratio. So, if you are one of the just under 4/10 of 1% who contract it, you have an 83.2% chance of survival in the U.K.

One of my old friends over social media was slamming the United States for having twice as many confirmed cases per million people and came to the stark and yet incorrect conclusion that I’d be better off back in the U.K. as I’m twice as likely to contract the disease here. What my old friend was failing to recognize in his numbers is the fact that the more you test, the more cases will be uncovered. The United States has tested and is testing far more people at an accelerated rate that beats any other nation on the planet.

I have faith we will beat this pesky pandemic — knowing our numbers and knowing what we each need to do to impact the numbers are vital statistics, more so than ever to flatten this curve.

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