From the course: Running a Profitable Business: Understanding Financial Ratios

Olympic medals and GDP per capita

From the course: Running a Profitable Business: Understanding Financial Ratios

Start my 1-month free trial

Olympic medals and GDP per capita

“

- So, Jim, are you a sports fan? - Yes, I am. - What's your favorite sport? - Well, I could say it's a contest of wits with you. But it wouldn't. Would it really be fair for me to fight an unarmed man? - Yeah, that's hilarious. Thanks very humorous. Okay, sports fan. Which country won the most medals at the 2012 London Summer Olympics? - Well, I don't know for sure, but I would guess it was one of the following, the United States, China, or Russia, or maybe even the host country, Great Britain. - That's good guess those countries were one, two, three and four in the listing. But those countries are also quite large, and they sent large teams to London. Which country won the most medals per citizen? - That's a good question. I have no idea. But it certainly makes sense to control for the size of the country. - Well, the winner is Grenada. Grenada one exactly one medal. A gold medal for Kirani James in the 400 meter dash for men. That's one medal for every 105,000 people, which is the total population of Grenada. Second place was Jamaica, with a total of 12 metals. Three by Usain Bolt, which is one metal for every 226,000 people. The United States is way down the list. Hundred and four total medals. But that's only one medal for every 3 million people. Now, let me ask you another question. What's the richest country in the world? - Now I understand. I know that the United States has the highest gross domestic product, about 16 trillion in 2012. But it probably makes sense to look at GDP per person. - You're exactly right. You have to control for the size of the country. The top five in 2013 according to the International Monetary Fund were Qatar, $98,000 per person, Luxembourg, Singapore, Norway and Brunei. Those are the top five. The United States comes in at number six with GDP of $53,000 per person. - As you can see, when we're evaluating performance, it is important to adjust for the size of the organization. With company financial reports, we call this common size financial statements.

Contents