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08-29-2016 01:06 PM

Hello

I have an example and I am not sure how to handle with the data

Firm | Sales | Year | Change |

A | 120 | 2007 | -8% |

A | 130 | 2006 | -7% |

A | 140 | 2005 | |

B | 15 | 2006 | 25% |

B | 12 | 2005 | 20% |

B | 10 | 2004 |

Should I use Lines A-2005 and B-2004 in column "change" as 0 or missing data?

Thanks a lot!

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Solution

08-30-2016
12:22 AM

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08-29-2016 02:44 PM

Either,

Change = (Sales(y) - Sales(y-1)) / Sales(y-1);

if Sales(y-1) is unknown (missing) then Change should be missing.

if Sales(y-1) is zero (new product, new company) then change should be +Infinity

PG

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08-29-2016 02:00 PM

I would say it would depend on what your are going to do with that change variable later. If I wanted average change rate from year to year I would not want the value to be 0 as you would end up with an n of 3 and (0 + -7 + -8)/3 would notably different from the apparent -7.5% change average. (Noting that averaging percents is a dangerous activity in general).

But for some modely I may need a 0 as a baseline.

Solution

08-30-2016
12:22 AM

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08-29-2016 02:44 PM

Either,

Change = (Sales(y) - Sales(y-1)) / Sales(y-1);

if Sales(y-1) is unknown (missing) then Change should be missing.

if Sales(y-1) is zero (new product, new company) then change should be +Infinity

PG