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Ask HN: Do you know any useful "Back of the Envelope Calculations"?

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Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#1

Post by ddoonie »

Intrigued by the recent HN submission regarding estimating the revenues of a company, does anyone have any other useful back of the envelope calculations? Anything that you find useful for quick mental calculations - preferably for financial applications (but any are welcome).

Thanks

Re: Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#2

Post by cperciva »

One I use often is that 1 Mbps of IP packets ~~ 10 GB / day of data. (1 Mbps is 10.8 GB/day, but TCP/IP overhead will typically eat up at least 0.4 GB and usually close to 0.8 GB from that.)

Another, more often financial calculation: If you have X% growth, it takes 72/X time periods to double. (Accurate to within 1 time period for X% > 2%, and accurate to within 10% for X% < 29%.)

Re: Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#5

Post by cperciva »

gruseom wrote: post #4

It's trivial but useful that an hourly rate multiplied by 2000 gives a year's worth (for a standard working year).

Yep, that one's good, subject to the caveat that the 2000 is really 1800 in Europe (more holidays) and 1500 in France (lots of holidays AND a less hours per week).

Related and very useful: Consulting rates should start at annual income / 1000.

Re: Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#6

Post by jonsen »

Memorize powers of 2 up to 9

  0   1   2   3    4    5    6    7    8    9
  1   2   4   8   16   32   64  128  256  512
and

  2^10 = 1K,   2^20 = 1M,   2^30 = 1G  etc.
then split anything else

  ex. 2^23 = 2^20 * 2^3 =   8M
  ex. 2^37 = 2^30 * 2^7 = 128G
Edit: Also useful in reverse

  ex. 400K: 256K  2^18
At least memorize 2^4 = 16 (hex) and 2^8 = 256 (byte), then do doubling or halving as necessary.

Re: Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#9

Post by mixu »

I use revenue per employee as a rough guide to the type of company in question (is it human-based or tech/marketing-based? is it a startup or an established business?). It's simple to calculate, and revenue is usually less sensitive information than net income per employee (so easier to get for non-public companies). My feeling is that for the average (non-public, not particularly successful but OK, non-automated) company the average salary is about 1/3 of that (more or less). Actual net income per employee of course depends on the degree of automation and success.

Example tables:

http://www.jbryanscott.com/2009/02/07/nasdaq-100-revenue-per...

http://37signals.com/svn/posts/2283-ranking-tech-companies-b...

Re: Ask HN: Do you know any useful "Back of the Envelope Calculations"?

#10

Post by nailer »

zalew wrote: post #8
nailer wrote: post #7

Two: * Golden ratio is also miles to ks. Which means you can use Fibonacci to convert miles to ks. * Divide by square route of two for compound doubling time.

kilometer is km not ks. just sayin'

One is an abbreviation. The other is a coloquial term, pronounced 'kays' used in most western speaking metric countries.
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