-Tendo
<!-Quote-!>Quote:Jo Salkilld (White Giant)
Tuesday, August 9, 2011 - 12:30 am Click here to edit this post
The following is a copy of an email I received from the GMs a while ago, when I asked exactly the same question:
You asked about one of the most complex indexes indeed.
The most important factors are total income and cost.
The main factor is computed as:
1.3 total income this year + total income last year Divided by (you probably guessed)
1.3 total cost this year + total income last year.
There are some smoothing factors too, preventing sudden changes that occur all the time. The change of year causes a change in the index, because of the changing definition of this year and last year.
so the index is n times the current value plus the new value, divided by n+1.
n I remember as 6 or 7.
There are also some smaller corrections and measures that prevent a division by a very small number and a small factor that makes it more difficult to get into the hundreds, adding a small division factor. all this does not prevent the finance index from becoming very high.
There is no dependency at all on cash or assets as you could buy those for money.
Hugs and respect
Jo<!-/Quote-!>