Bayes’ Theorem In A Picture

2019-04-17

Bayes’ Theorem is a way to calculate conditional probability. The formula is very simple to calculate, but it can be challenging to fit the right pieces into the puzzle. The first challenge comes from defining your event (A) and test (B); The second challenge is rephrasing your question so that you can work backwards: turning P(A|B) into P(B|A). The following image shows a basic example involving website traffic. For more simple examples, see: Bayes Theorem Problems.

Click through for the image and related links.

Forensic Accounting: Cohort Analysis

2019-04-19

I continue my series on forensic accounting techniques with cohort analysis: In the last post, we focused on high-level aggregates to gain a basic understanding of our data. We saw some suspicious results but couldn’t say much more than “This looks weird” due to our level of aggregation. In this post, I want to dig […]

Basic Forensic Accounting Techniques

2019-04-17

I continue my series on forensic accounting techniques: Growth analysis focuses on changes in ratios over time. For example, you may plot annual revenue, cost, and net margin by year. Doing this gives you an idea of how the company is doing: if costs are flat but revenue increases, you can assume economies of scale […]

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