How to calculate percent growth
Percent growth, also known as percentage increase or decrease, plays a significant role in the world of finance, economics, and business. From tracking sales growth to analyzing the success of a marketing campaign, calculating percent growth can provide valuable insights for decision-making. In this article, we will discuss how to calculate percent growth step-by-step and provide examples so you can easily apply this calculation to your own data.
Step 1: Understand the Percent Growth Formula
The first step to calculating percent growth is understanding the formula. The percent growth formula is as follows:
Percent Growth = (Final Value – Initial Value) / Initial Value * 100
This formula shows the change in value as a percentage of the initial value. By plugging in the initial and final values into the formula, you will obtain the percent growth.
Step 2: Gather Your Data
To calculate percent growth, you will need two essential pieces of data – the initial value and the final value. These values can represent any data set for which you want to calculate the growth rate, such as company revenue, population size, or investments.
Step 3: Plug Your Data into the Formula
Once you have your initial and final values, plug them into the percent growth formula. Subtract the initial value from the final value and then divide that result by the initial value.
Step 4: Multiply by 100
Next, multiply your result by 100 to convert it into a percentage.
Step 5: Interpret Your Result
Your result will be a positive or negative percentage indicating an increase or decrease in growth. A positive percentage indicates an increase in growth, while a negative percentage indicates a decrease in growth.
Examples:
Let’s walk through two examples.
Example 1:
Suppose your company’s revenue increased from $10,000 to $12,500 between 2020 and 2021. Here’s how you would calculate percent growth:
Initial Value: $10,000
Final Value: $12,500
Percent Growth = (12,500 – 10,000) / 10,000 * 100
Percent Growth = 2,500 / 10,000 * 100
Percent Growth = 0.25 * 100
Percent Growth = 25%
In this example, your company experienced a 25% increase in revenue between 2020 and 2021.
Example 2:
Suppose the population of a city decreased from 200,000 to 190,000 between 2010 and 2020. Here’s how you would calculate percent growth:
Initial Value: 200,000
Final Value: 190,000
Percent Growth = (190,000 – 200,000) / 200,000 * 100
Percent Growth = -10,000 / 200,000 * 100
Percent Growth = -0.05 * 100
Percent Growth = -5%
In this example, the city’s population experienced a decline of -5% between the years of 2010 and 2020.
Conclusion
Understanding how to calculate percent growth will allow you to track changes in data over time accurately. With this simple formula and understanding of the process involved in calculating percent growth, you will be better equipped to make informed decisions using your data analysis.