Statistics in Business

Statistics in Business

The definition of statistics according to Dictionary.com (2012), "the science that deals with the collection, classification, analysis, and interpretation of numerical facts or data, and that, by use of mathematical theories of probability, imposes order and regularity on aggregates of more or less disparate elements." There are also four different levels of statistics and two different types. Descriptive statistics define the characteristics of a statistical measurement. Inferential statistics actually go more into depth of the results and draw up expected conclusions or show specified information within results shown.

When it comes to levels, there are four levels of statistics. Those levels are nominal, ordinal, interval, and ratio. For nominal the numbers are used to classify the data and ordinal shows the relationships between number of items. Then there's interval that also classifies, but orders and specifies distance between results as well. The last one is ratio, which is basically the same as the interval level but this level can also have a result of zero, which is what makes it different.

Businesses also use statistics when making certain decisions. Examples of statistical use in business are profit and loss statements, calculated cap rates and business proposals that demonstrate potential company growth and financial benefit. When a business decides to make a certain change they must use statistics to show how the change would create the desired results. That could be from making the company more money or bringing in more customers.

An example of when statistics are used would be during a basketball game. Stats would show percentage of hoops made versus attempted, it can also determine who the best player was during an entire season. A second example would be when an investor is going to invest in something they must view P&L, cap rate of investment, and vacancy rates (if residential investment) to determine if it is worth jumping into. The third example that comes to mind is when one goes onto a city's website and there is statistical information regarding the population and avg. number of graduated students, income brackets and so forth.