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GM and HM

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Krish Tejwani
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25 views14 pages

GM and HM

Uploaded by

Krish Tejwani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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GEOMETRIC ME

AN
AND HARMONIC
MEAN
By Krish Tejwani
GEOMETRI
C MEAN
DEFINITION
 Geometric mean is defined as the Nth root of the Product of N items or values.
 If there are two items, we take the square root. If there are three items we take the cube root.
And so on.
CALCULATION OF GEOMETRI
C MEAN
 The product of value of series will remain
PROPERTIES unchanged when the value of geometric men
is substituted for each individual value.
OF  Example:- The geometric mean

GEOMETRIC for series 2,4,8 is 4.


Therefore we have:-

MEAN 2 x 4 x 8 = 64
4 x 4 x 4 = 64
 GM is used to find
the average percent increase in sales,
production, population or other economic
or business series.
USES OF GEOMTR  GM is theoretically considered to be
IC MEAN the best average in construction of
index numbers. It satisfies the
time reversal test and gives equal weight to
equal ratio of change.
 It is rigidly defined.
 It is useful in average ratios and percentage
and in determining rates of increase and
MERITS decrease.

OF GEOMETRIC  It is capable of algebraic manipulation.


Example:- if the geometric average of two
MEAN or more series and their number of items
are known, a Combined GM can
be calculated.
LIMITATIO
NS  It is difficult to compute and to interpret and
so has restricted application.

OF GEOME
 It cannot be computed when there are
both negative and positive values in a series

TRIC
 It cannot be computed when one or more of
the values are zero.

MEAN
HARMONIC
MEAN
DEFINITION
 Harmonic mean is based on the reciprocal of numbers averaged.
 Harmonic mean is defined as the reciprocal of the arithmetic mean of the reciprocal of the
individual observation.
CALCULATION OF HARMONIC
MEAN
 Its value is based on every item of the series.

MERITS  It tends itself


to algebraic manipulation. Therefore
OF HARMONIC a Combined Harmonic Mean can be
calculated.
MEAN  In problems relating to time and rates, it gives
better results than other averages.
 It is not easily understood.

 It is difficult to compute.

 It gives the largest weight to smallest items. This


is generally not a desirable feature.
LIMITATIONS OF HA  This average is not very useful for the analysis
RMONIC MEAN of economic data.
 Its value cannot be computed when there
are both positive and negative items in a series.
 Its value cannot be computed when one or more
items are zero.
RELATIONSHIP AMONG
THE AVERAGES

Arithmetic mean is greater than geometric mean and geometric mean is greater than harmonic
mean. The equality sign holds only if all the numbers i.e. X1, X2, X3.....Xn are identical.

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