When, sometime in 1492, Christopher Columbus sailed West from Spain, he thought that he would arrive presently in East Asia and be able to set up new direct trade routes. And two months later, when he landed in what we now know as the Bahamas, he thought he’d done just that.
But he was wrong. Nearly 10,000 miles wrong. So how did that happen?
Well, there are various theories, but the most common is a tale of wrong units. To calculate the circumference of Earth, Columbus used the writings of Al-Farghani, a 9th century astronomer, who himself had based his geographical calculations on Ptolemy’s 2nd century work.
Al-Farghani estimated that each of Earth’s 360 degrees is equal to 56.67 miles at the equator. This is about 10% above the true value, which would not have been terrible, but Columbus mistakenly assumed that Al-Farghani had used the Roman mile (~0.9 modern miles) in his writings, whereas he had actually used the Arabic mile (~1.3 miles). This resulted in a 25 percent underestimate of Earth’s circumference which, when combined with a significant overestimate of the size of Asia, led to Columbus’s mistake.
So who’s to blame in this story? Columbus? Well, perhaps he should have performed some rudimentary quality control on his calculations, or asked someone else to - always a good practice. Maybe Al-Farghani? I mean, did he actually specify the units he was using? I suppose everyone around him used the same version of the mile so he thought it wasn't necessary, but you need to make your work future-proof right? Or whoever translated his work into Latin? Surely they should have appreciated that the reader would need some clarity? A couple of footnotes and a glossary maybe.
In the interests of fairness, let’s say that they were all to blame. You can’t overuse Units!
When we’re creating financial Models, too often we use Units as an afterthought. It’s a column of our spreadsheet we should really fill in, but we probably put minimal effort into it, despite the numerous benefits. Here are three of them:
- Readability - letting the reader, and future owners of the model, understand the intentions of your calculations
- Consistency - adding a layer of quality control to your model, ensuring that you don’t add unrelated items together, or forget to convert them first. How many times have you forgotten to multiply by months in a year? Much harder to do if you’ve written “per month” in the relevant input to the calculation.
- Reusability - ensuring that outputs from your model are not misinterpreted. Columbus was 25 percent out in his calculations, but I’ll bet that there have been countless incidents of people in business having been a factor of 1000 out due to careless misreading of models.
In Models, from Taglo, Units aren’t just an afterthought. They’re built into the foundations of the software. Units are automatically derived from calculations, and you will see warnings if calculations don’t produce the desired Unit, or if a Unit cannot be derived due to a calculation error.
And because Units are so fundamental they also enable a range of additional functionality within Models:
- Differentiating between balances and flows (even when a calculation combines both)
- Understanding whether it can be ok to add items with different Units (spoiler alert: sometimes it can!)
- Easily adding context to data
- and more...
We’ll cover all of these in future posts. In the meantime, keep adding Units to your models!