Percentage change is a fundamental concept in mathematics, finance, and economics. It allows us to determine the proportionate change in a quantity and helps in comparing different values. In this article, we will cover basic steps on how to calculate percentage change using simple examples.

Step 1: Identify the Initial and Final Values

To calculate percentage change, you need to know two essential pieces of information: the initial value (old value) and the final value (new value).

Let’s consider an example:

A product’s price increased from $100 to $120. Here, the initial value is $100, and the final value is $120.

Step 2: Calculate the Difference between the Initial and Final Values

Next, find the difference between the initial and final values. Subtract the initial value from the final value:

Difference = Final Value – Initial Value

Using our example

Difference = $120 – $100

Difference = $20

The price difference is $20.

Step 3: Divide the Difference by the Initial Value

Now, divide the obtained difference by the initial (old) value:

Percentage Change = (Difference / Initial Value)

Continuing with our example:

Percentage Change = ($20 / $100)

Step 4: Convert to Percentage

To express this ratio as a percentage, multiply it by 100:

Percentage Change × 100

From our example:

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

Step 5: Interpret the Resulting Value

Calculate and analyze your result:

Percentage Change = 0.2 × 100

Percentage Change = 20%

So, there has been a 20% increase in the product’s price.

Note that if you obtain a negative value after calculating, this indicates a percentage decrease instead of an increase.

Conclusion

Calculating percentage change can be an essential tool for various aspects of life – from personal finance to market analysis. With a simple formula and clear understanding of the steps involved, determining percentage change becomes an easy task. Always remember to carefully identify the initial and final values, perform accurate calculations, and interpret the results accordingly.