Interesting read taken from a DynoJet article:

"A combination of two laws of physics, force equals mass times acceleration and work equals force times distance, gives us this equation: W=m X a X d. "W" is the work, in pounds-feet, the rear wheels are doing, "m" is mass equivalent (the drums), "a" is acceleration (increasing drive wheel speed) and "d" is distance (drum circumference). Once we have the work, we can find horsepower. One horsepower is 550 pounds-feet of work done in one second so, we divide the work number by the length of time measured, then divide the number we get from that by 550. To simplify: we get horsepower by multiplying the mass, acceleration and the distance, then dividing that product by time multiplied by 550. This can be expressed by: hp = (m X a X d) ÷ (t X 550).

Torque can be figured by multiplying the horsepower by a constant, 5252, then dividing that product by the speed at which the thrust force was measured. Generally, with rear wheel numbers, axle ratio is not considered in the torque computation. For comparison purposes, this makes more sense. The computer factors out the axle ratio by using engine speed data in the torque derivation."

"While Dynojet can measure "coast down" power consumption by a vehicle’s powertrain, they cannot accurately measure parasitic loss for the purpose of figuring flywheel power output from rear wheel output. **Differences in power losses during acceleration** and deceleration prevent this."