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calculation-standards.md

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1# Calculation Verification Reference

3This file provides formulas and guidelines for verifying pre-calculated values in source data before populating templates. Source data should already contain calculated figures—use these formulas to verify accuracy.

Calculation Verification Reference

This file provides formulas and guidelines for verifying pre-calculated values in source data before populating templates. Source data should already contain calculated figures—use these formulas to verify accuracy.

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5## Contents

7- [Key Verification Formulas](#key-verification-formulas)

8- [Consensus Methodology](#consensus-methodology)

9- [Rounding Guidelines](#rounding-guidelines)

10- [Verification Checklist](#verification-checklist)

11- [Red Flags to Investigate](#red-flags-to-investigate)

13---

Key Verification Formulas
Consensus Methodology
Rounding Guidelines
Verification Checklist
Red Flags to Investigate

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15## Key Verification Formulas

Key Verification Formulas

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17### CAGR Projection

19**Formula:**

20```

21Future Value = Present Value × (1 + CAGR)^n

22```

24**Variables:**

25- Present Value: Current/base year market size

26- CAGR: Compound Annual Growth Rate (as decimal, e.g., 16.4% = 0.164)

27- n: Number of years between base and target year

29**Verification example:**

30```

31Source claims: $22.1bn (2024) at 16.4% CAGR = $55.0bn (2030)

33Verify: 22.1 × (1.164)^6 = 22.1 × 2.488 = 55.0 ✓

34```

36**Calculating n (years):** Count years between base and target year. Examples: 2024→2030 = 6 years, 2025→2030 = 5 years.

CAGR Projection

Formula:

Future Value = Present Value × (1 + CAGR)^n

Variables:

Present Value: Current/base year market size
CAGR: Compound Annual Growth Rate (as decimal, e.g., 16.4% = 0.164)
n: Number of years between base and target year

Verification example:

Source claims: $22.1bn (2024) at 16.4% CAGR = $55.0bn (2030)

Verify: 22.1 × (1.164)^6 = 22.1 × 2.488 = 55.0 ✓

Calculating n (years): Count years between base and target year. Examples: 2024→2030 = 6 years, 2025→2030 = 5 years.

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38### Valuation Multiples

40**EV/Revenue:**

41```

42EV/Revenue Multiple = Enterprise Value ÷ Revenue

43Implied EV = Revenue × Multiple

44```

46**EV/EBITDA:**

47```

48EV/EBITDA Multiple = Enterprise Value ÷ EBITDA

49Implied EV = EBITDA × Multiple

50```

52**Verification example:**

53```

54Source claims: $436m deal at 9.7x revenue multiple on $45m revenue

56Verify: 436 ÷ 45 = 9.69 ≈ 9.7x ✓

57```

Valuation Multiples

EV/Revenue:

EV/Revenue Multiple = Enterprise Value ÷ Revenue
Implied EV = Revenue × Multiple

EV/EBITDA:

EV/EBITDA Multiple = Enterprise Value ÷ EBITDA
Implied EV = EBITDA × Multiple

Verification example:

Source claims: $436m deal at 9.7x revenue multiple on $45m revenue

Verify: 436 ÷ 45 = 9.69 ≈ 9.7x ✓

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59### Market Share

61**Formula:**

62```

63Market Share = (Segment Size ÷ Total Market Size) × 100

64```

66**Verification example:**

67```

68Source claims: Online segment ($18bn) is 28% of total market ($65bn)

70Verify: 18 ÷ 65 = 0.277 = 27.7% ≈ 28% ✓

71```

Market Share

Formula:

Market Share = (Segment Size ÷ Total Market Size) × 100

Verification example:

Source claims: Online segment ($18bn) is 28% of total market ($65bn)

Verify: 18 ÷ 65 = 0.277 = 27.7% ≈ 28% ✓

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73### Growth Rate

75**Year-over-Year:**

76```

77YoY Growth = (Current Year - Prior Year) ÷ Prior Year × 100

78```

80**CAGR from endpoints:**

81```

82CAGR = (End Value ÷ Start Value)^(1/n) - 1

83```

85---

Growth Rate

Year-over-Year:

YoY Growth = (Current Year - Prior Year) ÷ Prior Year × 100

CAGR from endpoints:

CAGR = (End Value ÷ Start Value)^(1/n) - 1

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87## Consensus Methodology

89When source data contains multiple estimates, verify consensus calculations:

Consensus Methodology

When source data contains multiple estimates, verify consensus calculations:

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91### Size Consensus (Range)

93**Method:** Full min-max range across all sources

95**Example:**

96```

97Sources: $14.9bn, $18.3bn, $21.1bn, $21.2bn, $22.1bn

98Consensus: $15-22bn (rounded to nearest $1bn)

99```

100

Size Consensus (Range)

Method: Full min-max range across all sources

Example:

Sources: $14.9bn, $18.3bn, $21.1bn, $21.2bn, $22.1bn
Consensus: $15-22bn (rounded to nearest $1bn)

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101### CAGR Consensus (Central Cluster)

102

103**Method:** Exclude outliers (highest and lowest), use central cluster range

104

105**Example:**

106```

107Sources: 10.6%, 16.4%, 17.2%, 19.0%, 22.7%

108Exclude outliers: 10.6% (low), 22.7% (high)

109Central cluster: 16.4%, 17.2%, 19.0%

110Consensus: 16-19% or 16-17% (conservative)

111```

112

CAGR Consensus (Central Cluster)

Method: Exclude outliers (highest and lowest), use central cluster range

Example:

Sources: 10.6%, 16.4%, 17.2%, 19.0%, 22.7%
Exclude outliers: 10.6% (low), 22.7% (high)
Central cluster: 16.4%, 17.2%, 19.0%
Consensus: 16-19% or 16-17% (conservative)

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113### Projection Consensus

114

115**Method:** Apply consensus CAGR to midpoint of size range

116

117**Example:**

118```

119Size range: $15-22bn → Midpoint: $18.5bn

120CAGR consensus: 16-17%

121At 16%: 18.5 × (1.16)^6 = $45.1bn

122At 17%: 18.5 × (1.17)^6 = $47.5bn

123Consensus projection: $45-48bn

124```

125

126---

127

Projection Consensus

Method: Apply consensus CAGR to midpoint of size range

Example:

Size range: $15-22bn → Midpoint: $18.5bn
CAGR consensus: 16-17%
At 16%: 18.5 × (1.16)^6 = $45.1bn
At 17%: 18.5 × (1.17)^6 = $47.5bn
Consensus projection: $45-48bn

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128## Rounding Guidelines

129

130These are **typical conventions** — adjust based on the magnitude of values and template style:

131

132| Value Type | Typical Rounding | Example |

133|------------|------------------|---------|

134| Large market sizes ($10bn+) | Nearest $1bn | 18.47 → $18bn |

135| Smaller market sizes (<$10bn) | Nearest $0.5bn or $0.1bn | 2.3 → $2.5bn |

136| Size ranges | Match precision of sources | 14.9-22.1 → $15-22bn |

137| CAGR | Whole % or 0.5% | 16.4% → 16% or 16.5% |

138| Market share | Nearest 5% or match source | 27.7% → 25% or 30% |

139| Revenue ($m) | 1 decimal | 18.47 → $18.5m |

140| Multiples | 1 decimal | 9.688 → 9.7x |

141

142**Rounding principles:**

143- Rounding should not materially change the figure — for smaller values, use finer precision

144- Consistency matters more than precision — use same rounding across similar figures

145- When creating ranges, round down for low end, round up for high end

146- For summary statistics (mean, median), match precision of input data

147

148---

149

Rounding Guidelines

These are typical conventions — adjust based on the magnitude of values and template style:

Value Type	Typical Rounding	Example
Large market sizes ($10bn+)	Nearest $1bn	18.47 → $18bn
Smaller market sizes (<$10bn)	Nearest $0.5bn or $0.1bn	2.3 → $2.5bn
Size ranges	Match precision of sources	14.9-22.1 → $15-22bn
CAGR	Whole % or 0.5%	16.4% → 16% or 16.5%
Market share	Nearest 5% or match source	27.7% → 25% or 30%
Revenue ($m)	1 decimal	18.47 → $18.5m
Multiples	1 decimal	9.688 → 9.7x

Rounding principles:

Rounding should not materially change the figure — for smaller values, use finer precision
Consistency matters more than precision — use same rounding across similar figures
When creating ranges, round down for low end, round up for high end
For summary statistics (mean, median), match precision of input data

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150## Verification Checklist

151

152Before using any calculated value from source data:

153