how percentage changes work
percentage changes can be calculated for any quantity that you measure over time in finance the percentage change formula is often used to track the prices of both large market indexes like the s p 500 or dow jones industrial average and individual securities as well as to compare the fluctuating values of different nations currencies percentage change is also a widely used metric in business such as when a company illustrates its revenue growth year over year yoy in its balance sheet often if there is a significant percentage change the company will try to explain why for example for the third quarter of 2020 starbucks reported a 38 drop in net revenues over the same quarter in 2019 due to adverse impact of covid 19 1 subsequent quarterly reports showed the gradual recovery of starbucks revenues and positive percentage changes in net revenues as the business disruptions caused by covid 19 diminished 2percentage change like many other formulas used in finance can be calculated using spreadsheets such as microsoft excel or google sheets formula and calculation of percentage changeto calculate a percentage increase first determine the difference increase between the two numbers you are comparing 3increase new number original number begin aligned text increase text new number text original number end aligned increase new number original number next divide the increase by the original number and multiply the answer by 100 percentage increase increase original number 100 begin aligned text percentage increase left frac text increase text original number right times100 end aligned percentage increase original numberincrease 100 this expresses the change as a percentage i e the percentage change similarly to calculate a percentage decrease determine the difference decrease between the two numbers you are comparing decrease original number new number begin aligned text decrease text original number text new number end aligned decrease original number new number next divide the decrease by the original number and multiply the answer by 100 percentage decrease decrease original number 100 begin aligned text percentage decrease left frac text decrease text original number right times 100 end aligned percentage decrease original numberdecrease 100 the result expresses the change as a percentage i e the percentage change if you only want to remember one formula use the one for a positive increase if you do the result will be either positive or negative if you use both formulas the result is always positive and that will tell you whether the percentage change is an increase positive or a decrease negative uses of percentage changeinvestors companies and entire industries can benefit from analyzing how prices or other measures rise or fall from one period to the next here are some ways that investors can use percentage change calculations to their advantage example of calculating percentage changeas an example of calculating a percentage change consider grace who bought shares of a stock at 35 per share on jan 1 of last year a year later the stock was worth 45 50 per share by what percentage did grace s share value increase to answer this question first calculate the increase in price between the new and old numbers 45 50 35 10 50 then divide the increase by the original price 10 5 35 0 3 begin aligned frac 10 5 35 0 3 end aligned 3510 5 0 3 finally to get the percentage multiply the answer by 100 or simply move the decimal point two spaces to the right 0 3 100 30 begin aligned 0 3 times100 30 end aligned 0 3 100 30 grace s stock increased by 30 