How To Index Data To 100 In Excel

Indexation Formula (Table of Contents)

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Examples
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What is the Indexation Formula?

The term "indexation" refers to the technique of adjusting various values across the period of time on the ground of the value in a detail year which is identified as the base twelvemonth. In other words, the indexation techniques allow easier comparison of the changes in the value in any given year vis-à-vis the base of operations year. The formula for indexation can exist just derived by dividing the value of whatever subject area adept in any given yr by the value of the same good in the base twelvemonth and then the result is multiplied by 100. Mathematically, it is represented as,

Indexation = (Value in the Given Yr / Value in the Base Yr) * 100

Examples of Indexation Formula (With Excel Template)

Let's have an instance to understand the calculation of Indexation in a better fashion.

You lot tin download this Indexation Formula Excel Template hither – Indexation Formula Excel Template

Indexation Formula – Example #1

Let us take the instance of Crude Oil Cost per barrel over the final five years every bit shown below:

July 2014: $105.53
July 2015: $fifty.56
July 2016: $44.26
July 2017: $52.48
July 2018: $69.86
July 2019: $sixty.43

Based on the above-given information, prepare the tables for the crude oil price index if the base yr is 2014 and 2015.

Solution:

Crude Oil Price Index if Base Year July 2014

Price Index is calculated using the formula given beneath

Indexation = (Value in the Given Year / Value in the Base Year) * 100

For July 2015

Price Alphabetize = ($50.56 / $105.53) * 100
Cost Index = 47.91

For July 2016

Toll Index = ($44.26 / $105.53) * 100
Price Alphabetize = 41.94

For July 2017

Cost Index for= ($52.48 / $105.53) * 100
Cost Alphabetize for= 49.73

For July 2018

Price Index = ($69.86 / $105.53) * 100
Price Index = 66.xx

For July 2019

Price Index = ($60.43 / $105.53) * 100
Price Alphabetize = 57.26

Crude Oil Cost Index if Base Year July 2015

Price Index is calculated using the formula given below

Indexation = (Value in the Given Year / Value in the Base Twelvemonth) * 100

For July 2016

Cost Index =($44.26 / $fifty.56) * 100
Price Alphabetize = 87.54

For July 2017

Price Index = ($52.48 / $fifty.56) * 100
Price Alphabetize = 103.80

For July 2018

Price Index = ($69.86 / $50.56) * 100
Price Index = 138.17

For July 2019

Price Index = ($lx.43 / $fifty.56) * 100
Price Index = 119.52

Therefore, the above two tables show the value of indexation changes with the change of the base twelvemonth. Further, indexation makes the ciphering of inflation much easier.

Indexation Formula – Example #ii

Permit united states take the case of a consumer price index (CPI) which is most the common class of indexation. Let usa presume that the CPI basket of a country covers simply four items, food, education, fabric, and fuel. The land has decided 2010 to exist the base of operations year for measuring CPI. Prepare the CPI for the following items.

Solution:

Adding of Consumer Toll Index (CPI)

Value of Consumer Price Index (CPI) Basket is calculated every bit

For 2010

Value of CPI Handbasket = (25 * 40) + (30 * 32) + (20 * 56) + (15 * 35)
Value of CPI Basket = iii,605

For 2015

Value of CPI Basket = (25 * 36) + (thirty * 35) + (20 * 45) + (15 * 40)
Value of CPI Basket = 3,450

For 2019

Value of CPI Basket = (25 * 41) + (30 * 37) + (20 * 50) + (15 * 38)
Value of CPI Basket = 3,705

Consumer Toll Index if Base Yr is 2010

Consumer Toll Index is calculated using the formula given beneath

Indexation = (Value in the Given Year / Value in the Base Year) * 100

For 2015

Consumer Price Index = (3,450 / 3,605) * 100
Consumer Cost Alphabetize = 95.seventy

For 2019

Consumer Price Index = (3,705 / 3,605) * 100
Consumer Price Index = 102.77

Therefore, the CPI for the year 2015 and 2019 stood at 95.seventy and 102.77 respectively.

Explanation

The formula for indexation tin be calculated d past using the following steps:

Step 1: Firstly, information technology is very important to identify and fix the base of operations year. The base year is selected past an authorized body on the ground of various social and economic factors. Now, determine the value of the skilful or a basket of goods under consideration in the base year.

Step ii: Next, determine the value of the same good or basket of goods in any given yr.

Pace 3: Finally, the formula for indexation can be derived by dividing the value of any field of study good in any given yr (step 2) by the value of the same adept in the base year (footstep 1) and and so the result is multiplied past 100 as shown below.

Indexation = (Value in the Given Year / Value in the Base of operations Twelvemonth) * 100

Relevance and Uses of Indexation Formula

The concept of indexation is very important because information technology is usually used past organizations or governments to assess the impact of inflation of prices and nugget values. In fact, indexation finds awarding in wage comparing in a high aggrandizement environs. Some of the common examples of indexation include consumer toll index, raw material toll index, consumer confidence index, business conviction alphabetize, etc.