The percentage change is a simple mathematical concept that represents the degree of change over time. It is used for many purposes in Finance, often represent changes in prices of securities.
Breaking down the ‘change’
Percentage changes can be applied to any quantity that can be measured over time. Let’s say you track the quoted price of the securities. If the price increased, use formula [(new price – Old price)/Old price], and then multiply this number by 100. If the price dropped, you can use the formula [(Old price – new price)/Old price] and multiply this number by 100.
This formula is used for tracking the prices of individual securities and to major stock indexes, as well as by comparing the values of different currencies. Balances comparative financial statements usually include the price of a particular asset at different points in time, along with the percentage changes for the accompanying periods of time.
Calculation of percentage changes step by step
To calculate the percentage, first work out the difference (increase) between the two numbers to compare:
Increase = New Number – Original Number
Then divide to increase the original number and multiply the answer by 100:
% increase = increase ÷ Original number × 100.
If the answer is negative, this means that the percentage change is a decrease.
To calculate the percent reduction:
First, it turns out the difference (savings) between the two numbers you are comparing.
Decrease = Original Number – New Number
Then divide the reduction in the original number and multiply the answer by 100.
% Decrease = Decrease ÷ Original Number × 100
If the answer is a negative number, this percentage increases.
If you want to calculate the percentage increase or decrease of several numbers, it is recommended to use the formula to calculate the percentage increase. Positive values indicate the percentage, while negative values indicate the percent reduction.
Example of calculation of the percentage change
As an example, calculate the percentage change in the scenario of real life, consider Bob, who worked in January a total of 35 hours. In February he worked 45.5 hours, the percentage working time of the Bob to increase in February?
To solve this calculation, first calculate the difference in hours between the old and new rooms. 45.5 – 35 hours = 10.5 hours more hours worked Bob in February. To work out the percentage increase, divide the increase in the initial (January) number:
10.5 ÷ 35 = 0.3
Finally, to obtain the percentage multiply the answer by 100. This simply means moving the decimal point two columns on the right.
0.3 × 100 = 30
Thus, Bob worked 30% more hours in February than in January.