DEFINITION of 'BackOfTheEnvelope Calculation'
An informal mathematical computation, often performed on a scrap of paper such as an envelope. A backoftheenvelope calculation uses estimated and/or rounded numbers to quickly develop a ballpark figure. The result should be more accurate than a guess, but will be less accurate than a formal calculation performed using precise numbers and a spreadsheet or calculator.
BREAKING DOWN 'BackOfTheEnvelope Calculation'
Backoftheenvelope calculations might be used to determine whether further research and more detailed calculations are warranted. For example, an investor might look at a company's annual report and do a backoftheenvelope calculation to get its pricetoearnings ratio. If it is low enough to imply value, the investor can do a proper calculation which might include factoring in the weighted average shares outstanding for the year. If the quick estimate gave a high P/E ratio, time could be saved.

Interim Earnings Per Share
A measure of earnings calculated at a specified time, shorter ... 
Ballpark Figure
A rough numerical estimate or approximation. Ballpark figures ... 
PriceToInnovationAdjusted Earnings
A variation of the pricetoearnings ratio (P/E ratio) that takes ... 
Historic Pricing
A method for calculating the value of an asset using the last ... 
Earnings Per Share  EPS
The portion of a company's profit allocated to each outstanding ... 
Calculation Agent
An entity that determines the price of an investment product ...

Retirement
11 Social Security Calculators Worth Your Time
The safest Social Security calculators to use when figuring benefits are on the official website. The best are the ones that access your actual record. 
Investing
Calculating The Means
Learn more about the different ways you can calculate your portfolio's average return. 
Retirement
The 3 Best Social Security Calculators For 2016
Find out how to analyze your Social Security benefits under different retirement scenarios using multifunctional online Social Security calculators. 
Personal Finance
3 Best Mortgage Calculator Websites for UK Residents
Identify the features offered by good U.K. mortgage calculators, and learn where you can find some of the best calculators on the Web for U.K. borrowers. 
Retirement
Why Online Retirement Planning Tools Could Betray You
Retirement calculators on the web may paint a dangerously rosy picture of your future, according to new research from Texas Tech University. 
Insurance
4 Mortgage Calculators that Include Taxes and Insurance
Discover four websites that offer mortgage calculators that include property taxes and homeowners insurance cost along with other financial features. 
Investing
How to Calculate the Value of an ETF
An ETF is a good way to get broad exposure without taking on specific risk, but calculating performance may be a bit tricky. 
Personal Finance
Smart Ways to Use a Mortgage Calculator
When you're buying a home, it's essential to do due diligence about the true costs. Mortgage calculators will show you if you can afford the purchase. 
Investing
Gauge Portfolio Performance By Measuring Returns
Calculate returns frequently and accurately to ensure that you're meeting your investing goals. 
Investing
Time Value Of Money: Determining Your Future Worth
Determining monthly contributions to college funds, retirement plans or savings is easy with this calculation.

How accurate are online mortgage calculators?
Discover how to use online mortgage calculators to get an accurate estimate for monthly payments and what inputs are necessary ... Read Answer >> 
What is the difference between forward p/e and trailing p/e?
Understand the difference between the trailing P/E ratio, which is the standard pricetoearnings calculation, and the forward ... Read Answer >> 
Where can I find a good compound interest calculator free on the Internet?
Understand compound interest calculations and learn where you can find a good, free online compound interest calculator to ... Read Answer >> 
What is the formula for calculating the quick ratio in Excel?
Understand the basics of the quick ratio, including how it is used as a measure of a company's liquidity and how to calculate ... Read Answer >> 
How do you use a financial calculator to determine present value?
Learn how to utilize a financial calculator to calculate present value. Understand the necessary data, why it is important ... Read Answer >> 
What is the weighted average of outstanding shares? How is it calculated?
The amount of shares outstanding in a company will often change due to a company issuing new shares, repurchasing and retiring ... Read Answer >>