Introduction:

Percentage change is an important concept in various fields, such as finance, economics, and mathematics. It is generally used to measure the increase or decrease in the value of a particular quantity over a given period. In this article, we will walk you through the steps of calculating percentage change.

Step 1: Identify the Initial Value and Final Value

The calculation of percentage change involves knowing the initial value (the starting point) and final value (the ending point). For instance, if you are measuring the increase in sales of a product, you will need to know the starting sales figure (initial value) and the ending sales figure (final value).

Step 2: Calculate the Difference

Next, find the difference between the final value and initial value. This can be done by subtracting the initial value from the final value. The result will give you either a positive number or negative number depending on whether there is an increase or decrease in value.

Difference = Final Value – Initial Value

Example: If your company’s annual revenue increased from $100,000 (initial value) to $120,000 (final value), then:

Difference = $120,000 – $100,000

Difference = $20,000

Step 3: Calculate the Percentage Change

The percentage change is calculated by dividing the difference found in step 2 by the initial value and then multiplying it by 100.

Percentage Change = (Difference / Initial Value) × 100

Example: Continuing with our revenue example,

Percentage Change = ($20,000 / $100,000) × 100

Percentage Change = 0.2 × 100

Percentage Change = 20%

So, there was a 20% increase in annual revenue.

Interpretation:

A positive percentage change indicates an increase in value, while a negative percentage change indicates a decrease in value. In our example, we found that the annual revenue increased by 20%. If the percentage change was negative, it would have indicated a decrease in revenue.

Conclusion:

Calculating percentage change is essential for understanding how values vary over time. It is used extensively in finance, economics, and other domains to track changes in variables and make informed decisions. Being able to calculate percentage change accurately enables you to better assess the performance of investments, compare products’ price changes, analyze trends in market data, and more.