How to Calculate Percentage Increase, Decrease, or Difference
How to calculate percentage increase shows the amount of increase from an original number to a larger number as a percentage or parts per 100.
Percentage change is a straightforward mathematical concept. It expresses the amount of change over time as a percentage. It is used in finance for a variety of applications. Investors use it to depict the price change of a stock, security, or another asset. The percentage change formula can be used to track the prices of individual stocks as well as overall market indices. It is also useful for comparing the values of various international currencies.
The concept of percentage increase is simply the amount from the original to the final figure expressed in terms of 100 parts of the original. A 10% increase means that if the original value is divided into 100 parts, the value has increased by an additional 10 parts. So, if the initial value rose by 20%, the value would rise by 20 for every 100 units, 40 for every 200 units, and so on.
How to Calculate Percentage Increase Step-by-Step
To calculate a percentage increase, first work out the difference between the two numbers you are comparing. Then, divide by the original number and multiply the answer by 100.
Increase (%) = [ (Final Value – Starting Value) / (Starting Value) ] × 100
- Percentage Increase = [(New Number – Original Number) / Original number} x 100
- First, subtract the original number from the new number
- Next, divide the increase by the original number and multiply the answer by 100
- If the answer is a negative number, that means the percentage change is a decrease.
How to Calculate Percentage Decrease
Percentage Decrease = [ (Starting Value – Final Value) / (Starting Value) ] × 100
- Percentage decrease = [(Original Number – New (lower) Number) / (New Number)] x 100
- First, subtract the new, lower number from the original number to work out the difference (decrease) between the two numbers you are comparing.
- Next, divide the decrease by the original number and multiply the answer by 100.
- % Decrease = Decrease ÷ Original Number × 100
- If the answer is a negative number, this is a percentage increase.
If you want to calculate the percentage increase or decrease of several numbers, it’s best to use the formula for calculating the percentage increase. Just keep in mind that positive values indicate a percentage increase whereas negative values indicate a percentage decrease.
How to Calculate Percentage Increase for a Stock
Assume you purchased 100 shares of Johnson & Jackson stock for $36 per share. Thirty days later, the share price has risen to $45 per share. What is the percentage increase in the price of Johnson & Jackson stock in the last 30 days?
Increase (%) = [ (Final Value – Starting Value) / (Starting Value) ] × 100
- 45 – 36 = 9
- 9 / 36 = 0.25
- 0.25 × 100 = 25%
So the price of Johnson & Jackson stock increased by 25% month over month.
How to Calculate Percentage Change
Percentage change can be applied to any quantity that you compare over time. For example, say you are tracking the quoted price of a stock.
- If the price increases, use the formula [(New Price – Old Price)/Old Price] and then multiply by 100.
- If the price decreases, use the formula [(Old Price – New Price)/Old Price] and multiply that number by 100.
This formula is used to track the prices of individual stocks as well as overall market indexes. It can also be used to compare currency values and fluctuations. Balance sheets containing comparative financial statements will often include the prices of certain assets at various times in time, as well as percentage changes throughout the corresponding time periods.
Example of Calculating Percentage Change
In April, XYZ stock traded at $35 per share. In May, it traded at $45.50 per share. What percentage increase did XYZ shares experience in February?
First, we can calculate the difference in share price between the new and old numbers. $45.5 – $35 = $10.50. We can see that XYZ shares are worth $10.50 more in May than in April – this is his increase. To work out the increase as a percentage, divide the increase by the original (April) number: 10.50 ÷ 35 = 0.3
Finally, to get the percentage we multiply the answer by 100. This simply means moving the decimal place two columns to the right: 0.3 × 100 = 30
Therefore, XYZ shares are worth 30% more in May than in April.
In June, XYZ stock dropped back to $35 again. This is the same share price as in April. What is the percentage difference between XYZ’s May share price of $45.50 and June $35?
- First, calculate the decrease in hours, that is: 45.5 – 35 = 10.5
- Then divide the decrease by the original number (May $45.50) so: 10.5 ÷ 45.5 = 0.23 (to two decimal places).
- Finally, multiply 0.23 by 100 to give 23%. XYZ’s shares were 23% lower in June than in May.
Sometimes it is easier to show a percentage decrease as a negative number. To do this follow the formula above to calculate the percentage increase. However, this time your answer will be a negative number if there was a decrease. In XYZ’s case, the change in share price between May and June is -$10.5 (negative because it is a decrease). Therefore -10.5 ÷ 45.5 = -0.23. -0.23 × 100 = -23%.
Where is the percentage change useful?
The percentage increase is useful when you want to analyze how a value has changed with time. Although percentage increase is very similar to absolute increase, the former is more useful when comparing multiple data sets. For example, a change from 1 to 51 and from 50 to 100 both have an absolute change of 50, but the percentage increase for the first is 5000%, while for the second it is 100%, so the first change grew a lot more. This is why percentage increase is the most common way of measuring growth. (Source: omni.com)
Up Next: What Is a Margin Call?
A margin call is a demand from your broker to boost the equity in your trading account. It occurs when a margin account loses value and dips below the maintenance margin requirement level.
A margin call is triggered when the value of an investor’s margin account falls below the required amount set by the broker. Securities purchased using borrowed money are held in an investor’s margin account. Typically, these are a combination of the investor’s own money and a percentage borrowed from the investor’s broker. A margin call is a broker’s demand that an investor deposit additional funds or securities into the account. This is to bring it up to the minimum amount, known as the maintenance margin. A margin call is an indication that the value of one or more of the securities held in the margin account has fallen. When a margin call happens, the investor must decide whether to deposit more funds into their account or sell some of the assets in their account.
