Understanding Business and Office Jargon: What Does ‘Back of the Envelope’ Mean?

As a novice in the world of business and office jargon, you may have come across the phrase “back of the envelope” and wondered what it means. In a nutshell, the phrase “back of the envelope” is used to refer to a quick and informal calculation. It is a calculation that is made without access to more complex tools such as a calculator, spreadsheet program, or formulae.

The phrase comes from the days before calculators and computers, when all calculations were made by hand. It is said that mathematicians, scientists, and other professionals would often scribble down quick calculations onto the back of an envelope in order to work out an answer quickly.

Nowadays, the phrase has come to refer to any quick and impromptu calculation. It is mainly used by professionals such as businessmen, accountants, and financial advisors to refer to an estimated calculation that comes at the very start of the decision-making process. It is an informal and rough calculation that is used to give an indication of the potential gains, losses, or risks of a particular situation.

For example, if there is a proposal for a new project that requires an initial investment of $100,000, the analyst might use a “back of the envelope” calculation to work out whether the project is likely to be profitable. This calculation would involve estimated figures for costs, projected revenues, and future market conditions, among other things.

So, when you come across the phrase “back of the envelope”, it is used to describe a quick and informal calculation that is used to give a rough indication of the potential outcomes of a decision. It is an important tool for experienced professionals such as businessmen and financial advisors, and any novice entering the job market should familiarize themselves with this term and understand what it means.