Introduction:

Calculating growth percentage is a vital skill in various fields, such as finance, business, and economics. It helps you measure the progress and development over time. In this article, we’ll discuss how to calculate the growth percentage using a simple formula.

The Formula for Calculating Growth Percentage:

To calculate the growth percentage, you’ll first need to understand the equation for calculating percentage growth:

Growth Percentage = ((Ending Value – Starting Value) / Starting Value) x 100

Here’s a step-by-step explanation to help you through the process:

Step 1: Identify Starting and Ending Values

Starting Value refers to the original value or the initial point from where the growth starts. Ending Value is the final value obtained at the end of a specific period. These values could pertain to metrics like revenue, stock prices, population, or anything that experiences growth.

Step 2: Calculate the Difference Between Ending and Starting Values

Subtract the Starting Value from the Ending Value to find out the difference between them:

Difference = Ending Value – Starting Value

Step 3: Divide the Difference by the Starting Value

After finding the difference, divide it by the Starting Value:

Relative Change = Difference / Starting Value

Step 4: Convert Relative Change to Percentage

To convert Relative Change into Growth Percentage, multiply it by 100:

Growth Percentage = Relative Change x 100

Example:

Let’s say you want to calculate the growth percentage of your company’s revenue between two years. The revenue in Year A was $50,000, while in Year B, it was $65,000.

Starting Value (Year A) = $50,000

Ending Value (Year B) = $65,000

Difference = ($65,000-$50,000) = $15,000

Relative Change = ($15,000 / $50,000) = 0.3

Growth Percentage = (0.3 x 100) = 30%

Hence, the revenue of your company has grown by 30% between Year A and Year B.

Conclusion:

Calculating growth percentage is an essential skill for evaluating change and trends over a specified period. By understanding and utilizing this fundamental calculation, you can make informed decisions about your investments, business strategies, and other endeavors that involve assessing growth over time.