FYI: Ratio Estimation

** This approach involves identifying the ratio of the audit values and book values for the sampled items. ** Note that this approach is useful when the dollar amount of the differences between the audit and the book values is expected to be proportional to the book values. 1. Calculate the ratio for the sample, where the ratio has the sample's audit value in the numerator and the sample's book value in the denominator: R = av/bv 2. Estimate the population's audit value (a point estimate) by multiplying the population's book value by that “ratio:” AV = R * BV