Precision vs. Accuracy

From a business writing perspective, precision vs. accuracy are probably two of the most commonly misused terms out there. While they seem similar to most, their meaning is very different and using them incorrectly can result in significant communication errors. Accuracy refers to how close the measured values are to the actual correct value. In a business context having very accurate debt forecasts would mean that your forecasts are very close to the correct value. Precision refers to how close measured values are to each other. So a forecast model can be very precise in that it always forecasts the debt payments within a small range of values, but those values could be significantly different from the correct value. Ideally when forecasting, predicting, or projecting information you want to be able to provide results that are both accurate and precise. This would mean that you consistently get similar results that are all very close to the correct answer. This would give you confidence that the model is not only correct but is consistently correct, both of which are important from a business perspective.

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