# How To Calculate Percentage Change: A Comprehensive Guide

Percentage change is a simple way to see how much something has changed over time. But how to calculate percentage change? whether it’s a. It helps us understand if values are going up or down, like a company’s revenue or a stock price.

This calculation is commonly used in finance and business to compare performance, track investments, and analyze financial reports.

In this guide, we’ll explain percentage change, how to calculate it, and provide examples to help you understand the process.

## What is Percentage Change?

Percentage change is a basic calculation used in finance and business to measure how something, like a stock or investment, has performed over time. Here’s how it works.

Percentage change is commonly used to track and compare the performance of stocks, bonds, and market indexes. Businesses also use it to compare their current performance with past results.

The formula for percentage change is slightly different depending on whether you’re calculating an increase or a decrease.

## How Percentage Changes Operate

Percentage changes can be calculated for anything that changes over time. In finance, this formula is often used to track the prices of big market indexes like the S&P 500 or Dow Jones, as well as individual stocks and currencies from different countries.

In business, companies use percentage change to show things like year-over-year (YOY) revenue growth on their balance sheets. If there’s a big change, companies usually explain why.

Percentage increase and decrease calculations can help measure price fluctuations in products and services.

For example, Starbucks reported a 38% drop in net revenues in the third quarter of 2020 compared to the same period in 2019, blaming the impact of COVID-19. Later reports showed a recovery and positive percentage changes as the business rebounded.

## How To Calculate Percentage Change

Calculating your percentage change is simpler than it sounds. You can use the following formula:

### The formula for Percentage Change

- First, find the difference between the two numbers (the increase):
**Increase = New Number − Original Number**

- Then, divide the increase by the original number and multiply by 100:
**Percentage Increase = (Increase ÷ Original Number) × 100**

This gives the change as a percentage.

#### How to find percentage decrease, follow a similar process:

- Find the difference between the two numbers (the decrease):
**Decrease = Original Number − New Number**

- Divide the decrease by the original number and multiply by 100:
**Percentage Decrease = (Decrease ÷ Original Number) × 100**

This gives the percentage decrease.

Let’s understand the above with a simple example.

### Example of Calculating Percentage Change

Let’s say Alex bought a stock at $35 per share last year. A year later, the stock price went up to $45.50. To find out by what percentage the stock increased, follow these steps:

**First, find the difference between the new and old price:**- $45.50 – $35 = $10.50 increase.

**Next, divide the increase by the original price:**- $10.50 ÷ $35 = 0.3.

**To get the percentage, multiply by 100:**- 0.3 × 100 = 30.

So, Alex’s stock increased by 30%.

## Understanding a Balance Sheet and Its Link to Percentage Changes

A balance sheet is a financial report that shows a company’s assets, liabilities, and shareholder equity.

It provides a snapshot of the company’s financial status for a specific time frame, like a quarter or a year.

Companies often analyze their balance sheets by examining the percentage change in account balances over time. For instance, they might track how much cash has changed to assess liquidity.

## Percentage Change in Finance: How It’s Used

Percentage change helps investors track how a security’s value has risen or fallen over time, comparing it to the performance of a related index.

It’s also used to compare currencies and measure how much physical assets, like real estate, have gained value. Simply put, percentage increase decrease questions are useful for analyzing business growth and loss.

## Is the Percentage Difference the Same as the Percentage Change?

Percentage difference and percentage change are not the same. In percentage change, one of the numbers serves as the reference point, while in percentage difference, the average of the two numbers is used as the reference.

Additionally, percentage change can be positive or negative, but the percentage difference is always positive since it doesn’t have a direction.

For deeper insights into educational grading systems and their application in percentage calculations, explore our article on CGPA to Percentage GTU.

## Conclusion

In business and finance, percentage change is a handy calculation with several applications. Businesses use percentage increase and decrease to compare year-over-year performance.

Investors can quickly assess a specific investment’s performance by comparing its percentage change over a given time period to that of similar investments.

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