A:

A power ratio is a method used by media companies to measure revenue performance compared to the audience share it controls. In order to use the power ratio, a company must know three numbers: the total market revenue, the company's revenue, and the audience share. The goal for media companies is to receive a high score in this ratio.



A power ratio often is used to compare the performance of different media forms against similar competitors. A high power ratio means that more revenue is received per thousand visitors or participants within a given medium. Power ratios are used both by media firms to evaluate performance and occasionally by large media corporations who seek to buy out smaller media outlets.



This question was answered by Richard C. Wilson.



RELATED FAQS
  1. How do stock dividends affect the retained earnings account?

    Understand the difference between financial ratio analysis and accounting ratio analysis. Learn why ratio analysis is important ... Read Answer >>
  2. How do I use ratios to perform a financial analysis?

    Learn which ratios are used in fundamental analysis. Find out how analysts measure company performance and financial health ... Read Answer >>
  3. How does ratio analysis make it easier to compare different companies?

    Learn what ratio analysis is, how investors can compare companies within the same sector using ratio analysis and how ratios ... Read Answer >>
  4. What is the difference between efficiency ratios and profitability ratios?

    Learn about efficiency and profitability ratios, what these ratios measure and the main difference between efficiency and ... Read Answer >>
  5. What role does ratio analysis play in valuing a company?

    Learn about the role of ratio analysis in determining company value, including some of the most common ratios used by modern ... Read Answer >>
  6. Which financial metrics are best for analyzing companies in the chemicals sector?

    Learn about some of the key financial metrics that investors and market analysts commonly use to evaluate companies in the ... Read Answer >>
Related Articles
  1. Markets

    Analyze Investments Quickly With Ratios

    Make informed decisions about your investments with these easy equations.
  2. Trading

    Ratio Analysis

    Ratio analysis is the use of quantitative analysis of financial information in a company’s financial statements. The analysis is done by comparing line items in a company’s financial ...
  3. Entrepreneurship & Small Business

    Why Is Old Media Interested in New Media?

    With their eye-popping valuations and investments, new media startups are hot. But why are legacy media organizations interested in them?
  4. Investing

    Financial Ratios to Spot Companies Headed for Bankruptcy

    Obtain information about specific financial ratios investors should monitor to get early warnings about companies potentially headed for bankruptcy.
  5. Investing

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
  6. Trading

    4 Simple Investing Ratios You Need To Know

    Dissecting a company’s financial statements to uncover ways to make money is a challenging endeavor. Here are four ratios that can help.
  7. Markets

    Do Your Investments Have Short-Term Health?

    If a company is strong enough to survive tough times, it is more likely to provide long-term value.
  8. Investing

    Efficiency Ratio

    There are many types of efficiency ratios, but all measure how well a company utilizes its resources to make a profit. Business managers use these ratios to determine how well they are operating ...
  9. Investing

    Key Financial Ratios to Analyze Tech Companies

    Understand the technology industry and the companies that operate in it. Learn about the key financial ratios used to analyze tech companies.
  10. Managing Wealth

    Asset Turnover Ratio

    Investopedia explains: The asset turnover ratio is a measure of a company's ability to use its assets to generate sales or revenue, and is a calculation of the amount of sales or revenue generated ...
RELATED TERMS
  1. Power Ratio

    A measure of a media company's revenue performance (i.e., advertising ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ...
  3. Ratio Analysis

    A ratio analysis is a quantitative analysis of information contained ...
  4. Key Ratio

    A mathematical ratio that illustrates and summarizes the current ...
  5. Combined Ratio

    A measure of profitability used by an insurance company to indicate ...
  6. Sales Per Share

    A ratio that computes the total revenue earned per share over ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center