Editing Dimensional analysis (section)

=== Finance, economics, and accounting ===
In finance, economics, and accounting, dimensional analysis is most commonly referred to in terms of the [[Stock and flow|distinction between stocks and flows]]. More generally, dimensional analysis is used in interpreting various [[financial ratios]], economics ratios, and accounting ratios.
* For example, the [[P/E ratio]] has dimensions of time (unit: year), and can be interpreted as "years of earnings to earn the price paid".
* In economics, [[debt-to-GDP ratio]] also has the unit year (debt has a unit of currency, GDP has a unit of currency/year).
* [[Velocity of money]] has a unit of 1/years (GDP/money supply has a unit of currency/year over currency): how often a unit of currency circulates per year.
* Annual continuously compounded interest rates and simple interest rates are often expressed as a percentage (adimensional quantity) while time is expressed as an adimensional quantity consisting of the number of years. However, if the time includes year as the unit of measure, the dimension of the rate is 1/year. Of course, there is nothing special (apart from the usual convention) about using year as a unit of time: any other time unit can be used. Furthermore, if rate and time include their units of measure, the use of different units for each is not problematic. In contrast, rate and time need to refer to a common period if they are adimensional. (Note that effective interest rates can only be defined as adimensional quantities.)
* In financial analysis, [[bond duration]] can be defined as {{math|(''dV''/''dr'')/''V''}}, where {{math|''V''}} is the value of a bond (or portfolio), {{math|''r''}} is the continuously compounded interest rate and {{math|''dV''/''dr''}} is a derivative. From the previous point, the dimension of {{math|''r''}} is 1/time. Therefore, the dimension of duration is time (usually expressed in years) because {{math|''dr''}} is in the "denominator" of the derivative.