Polls and Surveys
Polls are everywhere, but can skew information. To find out if a poll is accurate it is up to the journalist to find out…
Name and background on pollster or polling organization
Who funded the poll
How/When was it conducted
The exact wording of questions – this can affect results
The size of the sample, response rate, larger the group the more valid the results
The method used to select the sample.
The margin of error
The relationship of the poll to any news event that could alter the results of the poll.
At least 400 responses keep the margin of error down and is what many polls try to reach as a sample.
There are many different types of polls. Such as…
Census/universe/population sampling – samples everyone in the population.
Example – United States Census
Cluster Sampling – Sampling in one area or region
Multistage Sampling – Frequently used in national samples. This involves picking a specific geographic area, then selecting smaller and smaller subgroups
Systematic Random Sampling – Samples every Nth number of people in a phonebook, directory, or other reference book.
Quota sampling – choosing a sample based on known demographics, to find a proportionate number of certain sub-groups
Probability sampling – involves putting potential subjects in a lottery and drawing out a percentage. This way, everyone in the population has an equal chance of being chosen.
Margin of Error is a degree of accuracy based on standard norms. It is shown in a percentage based on the side of the randomly selected sample. This number should be included in all polls.
Example problem -
A poll from CBS indicates that North Carolina voters support Sen. Elizabeth Dole over challenger Kay Hagan in the polls, with 48% of voters in support of Dole. 45% of voters support Kay Hagan. The margin of error on the poll is 3.1%. Can you say that Elizabeth Dole is leading in the poll?
With the margin of error at 3.1%, this means there is a 3.1% range for the results. That mean Dole can lead by as much as 51.1% (48% + 3.1%) or as little as 44.9% (48% – 3.1%)
This indicates that there is little statistical difference between the candidates’ level of support.
Confidence Level is the percentage at which researchers have confidence in their results. Mathematically, it indicates the probability of getting the same results by chance. A confidence level of 90 percent means there is a 10 percent that they would occur by chance
Adjusted figures are statistically manipulated figures that compensate for missing data
Z score or standard score of a figure, is how much a figure differs from the mean or average of the data.
Formula
Z score = (raw score – mean) / standard deviation
Business
Business news can come in many forms, including….
Quarterly earning reports – large corporations usually release these annually. It is information that can be used by investors, banks, brokers, and others to assess the financial condition of a company.
Annual reports – where more detailed information can be found. These can be available on-line, through stockbrokers, and in some libraries. Annual reports are also read by the Internal Revenue Service to review documents relative relating to a companies tax obligations.
Press releases
Financial Statements can be found in the company’s annual report. They usually include profit and loss report as well as a balance sheet
Profit and Loss (commonly referred to as P&L) shows if company is making money or not. There are many different methods are used to determine P&L, but usually this formula is what is represented.
Formula
Profit = Income-Expenses
Important Terms
Cost of Goods Sold – this refers to the direct expense of making and buying products.
Overhead- this refers to expenses not directly related to the product made and can includes salaries of employees, rent, utilities, and insurance.
Gross Margin – this is the difference between costs of goods sold and selling price
Net profit/Net earning/Net income. – this is the result of when all expenses are subtracted from income. Expenses can include overhead, cost of goods, taxes, and other expenses
EBITDA – this stands for earnings before interest, taxes, depreciation and amortization. It can be useful information when comparing companies
Formula
Gross margin = selling price – cost of goods sold
Important things to remember when reading financial statement….
-numbers are often written in thousands or millions, this will be disclosed at the top of a financial statement
-figures in parenthesis are negative
-compare net income over time, it’s more newsworthy to see difference over time.
FASB- this acronym stands for Financial Accounting Standards Board. It is an independent, non-governmental organization
Formulas
Gross profit = gross margin x number of items sold
Net profit =gross margin – overhead
Example
Joe is selling carrots at a market that he bought for 30 cents a unit. If Joe is selling the carrots at 50 cents per unit, what is his gross margin?
50 cents – 30 cents = 20 cents (Gross Margin)
Joe’s gross margin for the carrots are 20 cents.
Balance Sheet are written financial statement of a company’s assets, liabilities and equity. Balance sheets are used to show the financial stability of a company. With balance sheets, different companies can use different terms. Usually, the assets side of a balance sheet always equals the liabilities and equity side
Formula
Assets = Liabilities + Equity
To show what this formula can include…
Company assets (real estate, equipment, cash) minus liabilities (the money the company owes) equals equity (what the company is worth)
Important Terms
Assets – resources owned by the company that have economic value
Current assets – cash, investments, and other liquid items of value
Long-term assets – this can include buildings and office furniture
Accounts receivable – money owned to the company by customers
Accumulated depreciation – decline in the value of an asset
Inventory – record of goods on hand, raw materials, and work in progress
Intangible assets – copyrights, patents, and other research with legal and economic value
Investments in other corporations – form of stock owned or influence acquired in other companies for economic gain.
Fixed assets – property, plants, equipment, and deferred changes.
Short-term investments – stock and bonds
Pre-paid expenses – rent and insurance
Uncollected accounts receivable – write-offs for bad debts and an allowance for potential bad debts
Equity- the overall value of the company
Dividends – payments to shareholders that represent the distribution of the company’s assets
Retained earnings – earnings set aside for future business purposes
Liabilities – obligations, such as loans, that need to be paid off at later date
Accounts payable – bills that need to be paid
Accrued liabilities – liabilities that have occurred but not yet paid
Current or short-term liabilities – money owed
Long-term liabilities – debt, deferred taxes, and leases
Ratio Analysis are calculations that analysts and business owners use to evaluate a company’s cash situation, profitability, operating efficiency, and market value. Over time, they can examine trends in the company’s life. They can also be used to compare companies in the same field. While ratio analysis can act as an indicator of companies strengths and weaknesses, should be used cautiously.
Current Ratio is the liquidity ratio that measures the ability of a company to meet its liabilities. These are seen often.
Formula
Current ratio = Current assets / Current liabilities
Quick Ratio is a liquidity ratio that measure the ability of a company to meet its current liabilities with cash on hand.
Formula
Quick ratio = cash / current liabilities
Debt-to-asset ratio is similar to the current ratio. This includes all assets and all liabilities.
Formula
Debt-to-asset ratio = total debt / total assets
Debt-to-equity ratio tells how deeply a company is leveraged by comparing what is owned to what is owed
Formula
Debt-to-equity = total debt / equity
Returns on assets is a profitability ratio that measures the return on the investment of all assets
Formula
Return on assets = net income / total assets
Return on equity is a profitability ratio that measure the return on the investment made in equity
Formula
Return on equity = net income / equity
Price-earnings ratio is a value ratio that measures return of the investment based on stock price.
Formula
Price-earnings = market price/share / earnings/share
Stocks and Bonds
Stocks and bonds are two important ways businesses raise money.
Stocks are sold by corporations to make money. People buy stocks as an investment. Buying stock means the person becomes part owner of the company. The value of a stock can vary over time, based on demand. The more people who want to buy stock, the higher the price of the stock rises.
Mutual funds are an alternative way to invest in stocks. With mutual funds, companies sell shares of funds, then use that money to buy stock in other companies.
Important Terms
52-week high/low – highest and lowest stock prices over the year.
Stock – shortened version of the company’s name and used as the symbol of the stock.
Div – the most recent annual dividend the company paid to shareholders, per share.
PE or Price/Earnings ratio – the stock divided by the per-share earnings reported in the last 12 months.
Last – the price of one share at the previous day.
Change – how much the stock went up or down that day.
Bonds are used by corporations and governments raise money. A bond is a loan from an investor to the government or other organization selling the bond. Bonds can earn interest at a set rate and are generally low-risk investments. “Face value” refers to the amount the owner of the bond will receive at maturity. It is usually the amount the owner paid for the bond. Bonds have set interest rates, set dates for interest payment, and a set maturity date.
Investment reports
Important Terms
Form 8-k – companies are required to file an 8-k when a special event occurs, such as bankruptcy, major assets are bought or sold.
Form 10-k – official audited annual report public companies are required to file. This can show assets, liabilities, and revenue.
Form 10-Q – quarterly reports of important financial information.
Proxy Statement – a document sent to a shareholder about matters on which shareholders will vote.
Current yield – return on the investment.
Formula
Current yield = (interest rate x face value) / price
Example
Lillian paid $950 dollars for a $1,000 war bond with a 5 percent interest rate. What is her current yield on the bond?
(5% x $1,000) / $950 = about 5.26% is Lillian’s current yield
Bond cost refers to how much the bonds will ultimately cost.
Formula
Bond cost(interest) = amount x rate x years
Market Indexes are used to measure action on exchanges. They can track the prices of certain groups of stocks. Most commonly used market indexes include Dow Jones, NASDAQ, Russell 2000, and the S&P 500.
Dow Jones Industrial Average is the total value of one share each of 30 select stocks divided by a figure called the divisor. The divisor takes into account stock dividends, splits, spinoffs, and other applicable corporate actions. It can help to provide a snap shot of the entire market. The 30 stocks represent a fifth of the value of all US Stocks
NASDAQ, or National Association of Securities Dealers Automated Quotations, is another market index monitored by the Securities and Exchange Commission.
Property Taxes
Property taxes are important for journalists to understand because they are usually the largest single source of income for local government, school districts, and other municipal organizations. Property tax rate determined by taking the total amount of money the governing body needs, divided among the property owners of the district.
Most districts take into account real property, cars, boats and other valuable property.
Property taxes us units called mills, which are 1/10 of a cent.
Reappraisal means to update real property values to reflect current market value of all taxable properties within a taxing district.
Some property can be taxed by more then one governing body.
To simplify things, state officials often regulate the process.
Mill levy = taxes to be collected by the government body / assessed valuation of all property in the taxing district
Appraisel value can be based on all of the following…
Property’s use
Location
Square footage
Number of stories
Exterior wall type
Age
Quality of construction
Amenities
Current market conditions as determined by sales in the immediate area over a specific number of years
A visual inspection of the property by trained appraisers
Formula
Assessed value = appraisal value x rate
Formula for calculating property tax -
Taxed owed = tax rate x (assessed value of the property / $100)
Example
Andre Green has an assessed value on his home of $60,000. What does Green owe for the year with the property tax at $1 per $100, or 10 mills?
(60,000/100) x 1 = $600 dollars.
