Percentage Change

Percentage Change

What it is

Percentage change measures the relative change in a value between two points in time, expressed as a percent. It shows how much something (a price, revenue, population, etc.) has increased or decreased relative to its original value.

Why it matters

• Provides a standard way to compare changes across different scales (e.g., a stock vs. a commodity).
• Helps investors evaluate returns and compare holdings against benchmarks.
• Enables businesses to report and analyze growth or decline (for example, year‑over‑year revenue changes).
• Useful in many everyday contexts, such as tracking price changes, rainfall, or performance metrics.

Formula and calculation

Use the same basic formula for increases and decreases; the sign indicates direction.

Percentage change = ((New value − Original value) ÷ Original value) × 100

• If the result is positive, the value increased.
• If the result is negative, the value decreased.

You can calculate a percentage increase or decrease explicitly:
– Percentage increase = ((New − Original) ÷ Original) × 100
– Percentage decrease = ((Original − New) ÷ Original) × 100

Tip: Memorize the single formula above; its sign shows whether it’s an increase or decrease.

Spreadsheets (Excel, Google Sheets) can compute this directly, e.g., =(B2-A2)/A2*100.

Example

Grace bought a stock at $35 and it rose to $45.50.

1. Difference: $45.50 − $35 = $10.50
2. Divide by original: $10.50 ÷ $35 = 0.30
3. Convert to percent: 0.30 × 100 = 30%

The stock increased by 30%.

Practical uses

• Investment performance: Expresses returns (ROI) for stocks, bonds, funds.
• Portfolio analysis: Measures overall portfolio change and informs rebalancing decisions.
• Benchmark comparison: Shows whether holdings outperform or underperform an index.
• Risk management: Sets percentage‑based stop‑loss or target levels.
• Business reporting: Tracks revenue, cash, liabilities, and other balance sheet items across periods.

How it’s used in finance and accounting

Financial statements often report percentage changes (e.g., revenue YOY) to highlight trends. Analysts use these percent changes to assess growth, liquidity trends, and operational performance across periods and competitors.

Key takeaways

• Percentage change is a simple, widely applicable metric for comparing relative changes.
• Use the single formula ((New − Original) ÷ Original) × 100 and interpret the sign to determine increase or decrease.
• It is essential for investment analysis, business reporting, benchmarking, and daily decision making.