1. This other equation is a rule of three.
Its form is A = B times C, each of the three terms A, B and C being a ratio between two of the three variables: x / y = z / y times x / z. For example, 8 / 100 = 400 / 100 times 8 / 400, or 8% = 4 times 2%.
2. The discoverer of this application of the rule of three was, to our knowledge, the American Donaldson Brown.
Brown devised the formula in 1914 as Assistant Treasurer, working under John J. Raskob (Hagley). T. Brown's formula is none other than that of the now famous ROI and ROE, ROI being the acronym for Return On Investment and ROE for Return On Equity.
3. The conventions laid down in the following three propositions are of great help in formulating and interpreting this rule of three.
The first and third of these conventions complete what has been previously admitted about rate of return and profitability in relation to the rates of profit. The second defines the concept of productivity.