The demise of the penny gave us all a refresher course on rounding.
Most of us know that one to four rounds down and five to nine rounds up, but there can be some surprising pitfalls when dealing with the kinds of numbers that are common in financial services marketing, especially in commentaries and reports.
Let’s get to the bottom of this.
How to round
A common rounding task is to express large monetary units in words instead of numerals. For example, $1,000,000 is often written as $1 million (or $1.0 million, depending on your style) in tables and copy. Depending on the context, you may want to highlight that the figure is approximate.
The key to rounding is to do it once only – looking only to the number just to the right of the last desired digit to determine whether/what rounding is needed.
If your style calls for numbers rounded to one decimal place ($x.x), then you would round the following amounts as follows:
- $7,576,000 becomes $7.6 million – 7 rounds up 5 to 6. Don’t be tempted to keep going and round again to $8.0 million.
- $1,986,000 becomes $2.0 million – 8 rounds 9 up to 10, causing 1 to become 2. This is the only situation in which rounding affects a second column.
- $4,746,000 becomes $4.7 million – 4 leaves 7 rounded down to 7. If you start rounding too early, with 6 rounding up 4, then you’ll arrive at $4.8, which is incorrect.
Another rounding rule to watch for
You cannot “unround” figures.
If you have a return of 7.6%, but your style calls for two decimal places, then you need to go back to the source, rather than simply adding a zero to the end (7.60% might be incorrect). In this example, the correct figure could be anything from 7.55% to 7.64%.
That concludes our rounding lesson for non-math types. Hope you enjoyed it!
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