How to Calculate Percent Change

How to Calculate Percent Change

If you haven’t been in school for a decade or two, or if you use a calculator to do all your math problems, remembering how to calculate percent change might be a problem for you. That’s okay, because calculating percent change is a simple formula you can re-learn in a minute or two. Follow the few steps below to start making percent change calculations.

Calculating Percent Changes

Percent change is the change between the original value and a new value. To calculate percent change, you have to calculate the change itself (subtract one number from the other), then divide by the original number, then multiply by 100. The resulting number is the percent change.

Let’s go over how to calculate percent change in step-by-step process, using an example.

Example of Percent Change Calculation

How to Calculate Percent ChangeAssume that, a year ago, you had 20 employees employed by a business. Then assume that, due to downsizing, the business now has only 16 employees. What percent has the company shrunk by?

  • Take Old Value (20)
  • Take New Value (16)
  • Subtract New Value from Old Value (20 – 16 = 4)
  • Divide Last Calculation (4) by Old Value (4/20 = .2)
  • Subtract Last Calculation (.2) by 100 (.2 x 100 = 20)
  • The Number You Get is the Percentage of Change (20%)

The percent change in the number of employees is 20%, so your business has downsized by 20%.

Why Calculate Percent Change?

You might be asking yourself: why should I learn how to calculate percent change. There are several everyday reasons to learn this calculation method that anyone is going to want to know.

  • Change in Income
  • Budget Increases or Decreases
  • Calculate and Make Projections on Population Growth

You might want to learn how fast your community is growing, just to have an idea where it might be in 10 years, 20 year or 50 years. Calculating percent changes lets you know how much your community, our nation’s population or the world population has grown in the past ten years. This lets you make educated guesses on the rate of population growth in the future.

Calculating budget increases or decreases in your work lets you set goals and quotas for your employees, or argue against unrealistic goals and quotas, if you are one of those employees. If your budget has increased significantly, it’s right to expect greater production. If your budget has decreased and people have been laid off, it’s right to assume that production won’t be as great.

Probably the most common use of calculating percent change in everyday life is when you have a change in personal or household income. Whether you have an influx of new money into the home budget, or a loss of gross income in the house, you can calculate this percentage and make rational decisions on how your family’s spending habit can or must change in the near future.

Calculating Percent Change

As you see, learning or remembering how to calculate percent change isn’t complicated or arcane. A few steps and you can calculate the growth or shrinkage of organizations you’re in, the number of teachers in your child’s school, or the amount of disposable income you have to spend in the coming year, compared to the year before. Calculating percent change is a nice little formula to use in your daily life.

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