0

How is the 365% ROI figure found in chapter 7 of Huff's How To Lie With Statistics?

If I purchase an article every morning for 99 cents and sell it each afternoon for one dollar, I will make only 1 percent on total sales, but 365 percent on invested money during the year.

Total purchases are \$361.35 for the year and revenue is $365, so the 1% figure is valid.

Is it that the "same" \$0.99 are used to purchase the article everyday so investment only totals $0.99?

hmakholm left over Monica
  • 286,031
sam
  • 163

1 Answers1

0

You're right that the total investment is \$0.99, so the numbers in the quote are slightly wrong.

A profit of (unquestionably) \$3.65 for an initial investment of \$0.99 is $$ \frac{3.65}{0.99} = 3.686868\ldots \approx 369 \% $$ rather than the $365\%$ in the quote.

However, this probably doesn't invalidate whichever point is being made.

hmakholm left over Monica
  • 286,031