We use indexes as a way to simply state how some key business variable (e.g., profit) is comparing to a standard or budget. For example, if actual profit for some business in a month is $100 and the budget for the month is $50 then the index would be 100/50 or expressed as 200%. We would say that the actual is running twice as good as budget.

However, if either the actual results or the budget is negative, I don't know how to compute the index. For example, if the actual was ($100) and the budget was $50 what is the index?

Using the "old" math it would be a (200%) but this doesn't really make sense. The actual is actually 3 times worse than budget so I'd think the answer would be (300%).

Also, a convention is that if actual equals budget then the index is 100%. For example, if actual = ($100) and budget = ($100) then the index is 100%. In this structure, what would the index be if the actual was $0, or some would say 1 times better than budget hence shouldn't it be 100% too??

Where can I go to get help with this?

Thanks

Darrell Boomgaarden