“Now with 50% less fat.”

This ubiquitous claim at first glance seems quite straightforward.  But anyone with biology or nutrition background will quickly realize that it is anything but. Marketers often exploit our ignorance of a discipline to make claims that may be true but less than compelling to a critical thinker.

But marketers are not the only ones who manipulate perceptions using data.  While providing hard factual data–especially quantitative data–seems to lend automatic credibility to a claim, it can in fact obfuscate issues much more than clarify.

Accountants and finance professionals do it just as much–perhaps even more often on a day-to-day basis.  Four different bakeries in the same market might, for example, make a claim to its shareholders that it is the leading producer of chocolate chip cookies in its market.  And they could all be telling the truth.

One bakery might, for example, support its claim by comparing number of cookies sold.  Another might measure its position in the market by the weight of cookies sold since 1,000 small cookies could actually be less cookie than 100 jumbo cookies.

Still another bakery might measure its success as total sales revenue for chocolate chip cookies.  And the fourth might claim market leadership as the most profitable seller of chocolate chip cookies after expenses are deducted.

So is the first, second, third, or fourth bakery the market leader in the chocolate chip cookie segment?  Yes.

It all depends on what you plan to use the information for.  If you are an investor interested in maximizing your returns either by growth or dividends paid, then you are probably interested in the most profitable bakery.

If you are a stakeholder in the chocolate chip cookie value chain–a flour producer, for example–and would like to form a strategic alliance with your largest customer, you might be interested in which bakery consumes the most flour or produces the greatest mass of cookies.

A packaging company interested in identifying its most lucrative potential leads might be most interested in the bakery that sells the greatest number of cookies.

The bakery looking to secure more funds through debt might, for example, try to look as good a credit risk as possible by reporting highest revenues in the chocolate chip cookie market.

The combination of accounting and finance knowledge foundations and critical thinking will guide the analyst in evaluating performance measurements and critically assessing which metrics would be most appropriate for a given application.