When to use Absolute vs % Comparisons?

Hello, 

I would say the most important tip of all is keep the goal of the case in mind, is this a cost/revenue specific issue, or a broader profitability problem? 

• If it is a component-specific problem (i.e., cost or revenue), then just focus on this component and analyze its historical trend.
• If it is a profitability-wide problem, it is still helpful to analyze each component separately, but if you have the data, calculate profits or any profitability metric (i.e., margin) and analyze it.  

To your point about doing endless computations, you have to focus on what has the most impact on the core of the problem and prioritize it, it's not about doing everything, but about doing the right things! 

One last tip, working with % change is usually more insightful than absolute values as it can help you understand the magnitude of change and makes it easier to compare trends across metrics.  

Bottom-line is: Don't overthink, keep the goal of the case in mind, prioritize and focus on what matters and use % of change when you can. 

Hope this helps, 

Please feel free to reach out if you have any follow-up or if you want us to discuss a specific example!

Hi,

That’s a very specific question with a specific problem that doesn’t bring all of the context, so it’s hard to give an objective response.

In general, I would advise you to always look into %es when your talking about data MoM or YoY, as the absolute values can’t bring you any insight.

But more than that, in order for you to analyze properly an exhibit and don’t feel overwhelmed, always refer back to the case prompt, what you are trying to solve and what is the success metric to be optimized . If it is a profitability case, you’ll likely look to the table searching for insights related to revenue/costs; if it’s an M&A, you may be interested in synergies, and so on.

Happy to work with you in different math / exhibits drills explaining the logic behind them if that is a gap you would like to fill.

Best,

Mari

In this scenario, the insight is in change in profit margin (profit / rev)

Simple absolute is never the right answer, because absolute increases in rev OR cost are rarely insightful. Always look at margin changes.

I would suggest practicing exhibits and being intentional about getting level 3 insights. We can schedule a coaching call to discuss further if helpful.

Hi there,

I see you've received some great answers already on this. 

Since I'm assuming you're practising your casing skills at the moment, I'm adding here another resource you might find useful:

• Cheatsheet: The Must-Know Consulting Terms for Interviews

Best,
Cristian