Making use of all your information
How can we help accountants make use of all the information they generate?The role of an accountant often involves being a provider of information. But can information theory, one of the most important theories to arise in the 20th century, be of help?
Information theory is not just a vague discussion about information; it is a precise mathematical approach to quantifying information. The intuitive ideas and remarkably simple formulae at the heart of information theory mean it can be usefully applied to functions such as report design and forecast evaluation.
The origins of the theoryClaude Shannon developed information theory while working at Bell Labs and first published the theory in 1948, in an article titled A Mathematical Theory of Communication in the Bell System Technical Journal. The theory quantifies information using bits – short for binary digits – though other units are possible.
This is an extract from the Business & Management Magazine, Issue 271, February 2019.