# Back-Of-The-Envelope Calculation

An informal mathematical computation, often performed on a scrap of paper such as an envelope. A back-of-the-envelope calculation uses estimated and/or rounded numbers to quickly develop a ballpark figure. The result should be more accurate than a guess, but will be less accurate than a formal calculation performed using precise numbers and a spreadsheet or calculator.

Back-of-the-envelope calculations might be used to determine whether further research and more detailed calculations are warranted. For example, an investor might look at a company's annual report and do a back-of-the-envelope calculation to get its price-to-earnings ratio. If it is low enough to imply value, the investor can do a proper calculation which might include factoring in the weighted average shares outstanding for the year. If the quick estimate gave a high P/E ratio, time could be saved.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**Back-of-the-envelope calculation**— The phrase back of the envelope calculations refers to rough calculations that, while not rigorous, test or support a point. They are far more than a guess but far less than a proof. The phrase is generally used in mathematics, physics and… … Wikipedia**back-of-the-envelope calculation**— A back of the envelope calculation is a figure that was arrived at quickly or by using estimation as if someone had grabbed the first scrap of paper they found and made a quick guess … The small dictionary of idiomes**back-of-the-envelope calculation**— This expression refers to a quick approximate calculation done informally, as on the back of an envelope. I don t need the exact amount. Just give me a back of the envelope calculation … English Idioms & idiomatic expressions**back-of-the-envelope**— adj, always used before a noun informal : done to provide a rough idea of something I can t tell you the exact amount, but my back of the envelope [=rough] calculation indicates a cost of about $300,000 … Useful english dictionary**on the back of an envelope**— (informal) Said of a calculation that is performed quickly and without scrupulous regard to accuracy • • • Main Entry: ↑envelop * * * on the back of an envelope phrase quickly and without thinking about all the details The proposal was no doubt… … Useful english dictionary**Envelope**— This article is about envelopes in packaging. For other uses, see Envelope (disambiguation). Front of an envelope mailed in the U.S. in 1906, with a postage stamp and address … Wikipedia**Back of a napkin**— #REDIRECT Back of the envelope calculation R from merge … Wikipedia**List of minor characters from The Hitchhiker's Guide to the Galaxy**— The following is a list of minor characters in the various versions of The Hitchhiker s Guide to the Galaxy , by Douglas Adams.AgrajagAgrajag is a constantly reincarnated entity who ends up being killed multiple times by Arthur Dent. First… … Wikipedia**rough calculation**— /ˌrʌf ˌkælkjυ leɪʃ(ə)n/ noun a way of working out a mathematical problem approximately, or the approximate result arrived at ● I made some rough calculations on the back of an envelope … Dictionary of banking and finance**List of minor The Hitchhiker's Guide to the Galaxy characters**— The following is an alphabetical list of the minor characters in the various versions of The Hitchhiker s Guide to the Galaxy, by Douglas Adams. The descriptions of the characters are accompanied by information on details about appearances and… … Wikipedia