Back of the Envelope Calculation - Definition
Written by Jason Gordon
Updated at December 18th, 2020
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
Back to: RESEARCH, ANALYSIS, & DECISION SCIENCE
Back-Of-The-Envelope Calculation Definition
A back-of-the-envelope calculation is a form of mathematical calculation carried out quickly just to give a rough estimate of a particular calculation. It is an informal calculation done on an envelope or a piece of paper. This type of rough mathematical calculation is not often accurate, it is just an estimated rounded number computed hastily to create a ballpark figure. A back-of-the-envelope calculation is often used by salespersons, accountants and even professionals that want to use ballpark figures to give estimate of a present or future result. Although, the result of this calculation is expected to be more accurate than a guess and at the same time not as accurate as a formal mathematical calculation.
A Little More on What is a Back-Of-The-Envelope Calculation
A back-of-the-envelope calculation is often used in science, technology, engineering and mathematical fields. Accountants and financial professionals use this rough and quick calculation to examine whether there is a need to carry out a more detailed calculation. Professionals, mathematicians and individuals that want to perform a quick mathematical estimation of a figure use the back-of-the-envelope calculation. For instance, at the World Government Summit in 2017, Elon Musk gave some back-of-the-envelope calculations on how aliens from outer space could possibly reach the earth. Through the use of a back-of-the-envelope calculation, Elon Musk was able to present his predictions of how aliens invade the skies and can also reach the earth.
Reference for Back-Of-The-Envelope Calculation
- https://en.wikipedia.org/wiki/Back-of-the-envelope_calculation
- https://www.investopedia.com Investing Financial Analysis
- https://www.wired.com/story/how-to-get-better-at-back-of-the-envelope-calculations/
- book.bionumbers.org/how-to-make-back-of-the-envelope-calculations/
- https://en.wiktionary.org/wiki/back-of-the-envelope