How to Calculate Percentage Change
Percentage change is a measure of the relative change between two values. It is calculated by dividing the difference between the two values by the original value and multiplying the result by 100.
The formula for percentage change is:
Percentage change = ((New value - Old value) / Old value) x 100For example, if a company’s sales increase from $100,000 to $120,000, the percentage change in sales is calculated as follows:
Percentage change = ((120,000 - 100,000) / 100,000) x 100 = 20% Why is Percentage Change Useful?
Percentage change is a useful statistic because it allows you to compare the relative change between two values, regardless of their absolute values. This makes it a valuable tool for making comparisons between different time periods, different companies, or different products.
How to Calculate Percentage Change in Different Scenarios
1. Calculating Percentage Change Over Time
To calculate the percentage change over time, you need to know the initial value and the final value. The formula is:
Percentage change = ((Final value - Initial value) / Initial value) x 100For example, if a company’s stock price increases from $10 to $12 over a period of time, the percentage change in stock price is calculated as follows:
Percentage change = ((12 - 10) / 10) x 100 = 20%2. Calculating Percentage Change Between Two Values
To calculate the percentage change between two values, you need to know the original value and the new value. The formula is:
Percentage change = ((New value - Original value) / Original value) x 100For example, if a company’s sales increase from $100,000 to $120,000, the percentage change in sales is calculated as follows:
Percentage change = ((120,000 - 100,000) / 100,000) x 100 = 20%3. Calculating Percentage Change When the Original Value is Zero
If the original value is zero, you cannot calculate the percentage change using the standard formula. Instead, you can use the following formula:
Percentage change = (New value / 0) x 100However, it’s important to note that this formula will result in a percentage change of infinity. This is because dividing any number by zero results in infinity.
FAQs
1. What is the difference between percentage change and percent change?
Percentage change and percent change are two terms that are often used interchangeably. However, there is a subtle difference between the two. Percentage change is expressed as a percentage, while percent change is expressed as a decimal.
2. How do you calculate the percentage change of a negative number?
To calculate the percentage change of a negative number, you follow the same formula as you would for a positive number. However, the resulting percentage change will also be negative.
3. Can you have a percentage change of more than 100%?
Yes, it is possible to have a percentage change of more than 100%. This would occur if the new value is more than double the original value.
4. What is the opposite of percentage change?
The opposite of percentage change is absolute change. Absolute change is the difference between two values, expressed in the same units as the original values.
