Sometimes nonaccounting data can help us better understand accounting data. For example, accounting includes numerous estimates (e.g., allowance for doubtful accounts) than nonaccounting data can help make more accurate.

Economic data

Accountants often use macroeconomic data - data on the performance, structure, behavior, and decision-making of the economy as a whole - for diagnostics and predictions (to be discussed in later modules). Data available include:

• Gross domestic product (GDP) - measures economy wide performance.

• Unemployment numbers - measures labor availability.

• Consumer price index - a measure of inflation.

• Housing market starts and price levels - a key measure of economic status.

Current and historical stock prices

Stock price data can be used in many different ways. For example, stock price data is used to calculated equity-based compensation expense.

Social media

Investing chat websites - StockTwits, Twitter

Investors like to share their opinions on stocks. Data analysts can use computer programs to assess the sentiment on these sites to see how it is related to stock price.

General chat sites (Amazon) - Tide Pods

Other chat sites provide information that is useful interpreting accounting data. For example, by looking at reviews, Amazon can tell how well Tide Pods are selling and if the product is pleasing customers. This data can help predict future sales or assess inventory obsolescence.

Analyst research reports and earnings forecasts

Financial analysts often prepare research reports talking about company prospects. They synthesize financial statements, listen to conference calls, and talk to managers of a company to prepare a research report.