# Analyzing Ratios

Note — as a rule:Numerators and denominator in any useful ratio must have meaningful logical connection, not just a history of correlation.If your numerator and denominator do not share a meaningful logical connection (and you still want to use this ratio), do not put a percentage sign on it!Unfortunately, even assuming you have strong logical discipline in the creation of your percentages, you must remember that these measures are binary..In other words, the percentage may change because of movement in either the denominator or the numerator..Your percentage is not so insightful, if that is not apparent.Averages have all their own trials and tribulations..First, means, medians, and modes are all often called averages..Averages are often filtered and/or weighted with little done to call that out.Averages have a secondary issue as well..I have written extensively about the myth of the average..Averages are meant to simplify the quantification of normally distributed populations..Populations that are not normally distributed have averages that are often quite meaningless and misleading.Finally, averages calculated in time series are also susceptible to changing denominators..As a rule:If you are going to calculate an average over time, you should do your best to lock the denominator.Many an analyst has pronounced improving or deteriorating performance based on the movement of an average, only to realize that the underlying population had changed along the way..In other words, performance hadn’t improved, the population had simply changed..If you are going to quantify population changes there are better measures than averages.At this point, we could look at the third bucket..This would include interesting ratios for certain, but they often stretch, if not break, the logical connection rule.. More details