What is 'Percentage Change'

Percentage change is a simple mathematical concept that represents the degree of change over time. It is used for many purposes in finance, often to represent the price change of a security.

BREAKING DOWN 'Percentage Change'

Percentage change can be applied to any quantity that you measure over time. Let's say you are tracking the quoted price of a security. If the price increased, use the formula [(New Price - Old Price)/Old Price] and then multiply that number by 100.  If the price decreased, use the formula [(Old Price - New Price)/Old Price] and multiply that number by 100.  

This formula is used both to track the prices of individual securities and of large market indexes, as well as comparing the values of different currencies.  Balance sheets with comparative financial statements will generally include the prices of specific assets at different points in time along with the percentage changes over the accompanying periods of time.  

Calculating Percentage Change Step-by-Step

To calculate a percentage increase, first work out the difference (increase) between the two numbers you are comparing: 

Increase = New Number - Original Number

Next, divide the increase by the original number and multiply the answer by 100:

% increase = Increase ÷ Original Number × 100.

If the answer is a negative number, that means the percentage change is a decrease.

To calculate percentage decrease:

First, work out the difference (decrease) between the two numbers you are comparing.

Decrease = Original Number - New Number

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 wish to calculate the percentage increase or decrease of several numbers, it's best to use the formula for calculating percentage increase. Positive values indicate a percentage increase whereas negative values indicate percentage decrease.

Example of Calculating Percentage Change

As an example of calculating percentage change in a real-life scenario, consider Bob, who worked a total of 35 hours in January. In February, he worked 45.5 hours, by what percentage did Bob’s working hours increase in February? 

To solve this calculation, first calculate the difference in hours between the new and old numbers.  45.5 - 35 hours = 10.5 hours more hours worked by Bob in February. To work out the increase as a percentage, divide the increase by the original (January) number:

10.5 ÷ 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, Bob worked 30 percent more hours in February than he did in January.

RELATED TERMS
  1. Average Return

    The simple mathematical average of a series of returns generated ...
  2. Total Finance Charge

    A total finance charge is a fee that a consumer must pay for ...
  3. Change

    For an options or futures contract, change is the difference ...
  4. Negative Growth

    Negative growth is a contraction in a country's economy as evidenced ...
  5. Net Change

    Net change is the difference between the closing price of a security ...
  6. Price Change

    A price change indicates a new valuation has been made on the ...
Related Articles
  1. Trading

    Percentage Price Oscillator—An 'Elegant Indicator'

    The percentage price oscillator, which measures momentum, is among the more sophisticated tools in the technical analysis arsenal.
  2. Investing

    Equity Multiplier

    The equity multiplier is a straightforward ratio used to measure a company’s financial leverage. The ratio is calculated by dividing total assets by total equity.
  3. Investing

    The art of selling a losing position

    Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.
  4. Investing

    Tracking volatility

    When market volatility spikes or stalls, the VIX (the CBOE Volatility Index) is a benchmark index designed to track S&P 500 volatility. Learn how VIX is calculated.
  5. Investing

    Explaining Expected Return

    The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome.
  6. Personal Finance

    Schedule Loan Repayments With Excel Formulas

    Learn how to calculate all the particulars of a loan using Excel, and find out how to set up a schedule of repayment for a mortgage or any other loan.
  7. Investing

    Time Value Of Money: Determining Your Future Worth

    Determining monthly contributions to college funds, retirement plans or savings is easy with this calculation.
  8. Small Business

    Understanding the Capital Adequacy Ratio

    The capital adequacy ratio (CAR) is an international standard that measures a bank’s risk of insolvency from excessive losses. Currently, the minimum acceptable ratio is 8%. Maintaining an acceptable ...
RELATED FAQS
  1. What is a basis point (BPS)?

    A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial ... Read Answer >>
  2. What is the "percentage off the 52-week high or low"? How is this calculated?

    The "percentage off the 52-week high or low" refers to when a security's current price is relative to where it has traded ... Read Answer >>
  3. How do I calculate compound interest using Excel?

    Learn how to calculate compound interest using three different techniques in Microsoft Excel. Read Answer >>
  4. How do I calculate the degree of operating leverage?

    The degree of operating leverage is a measure used to evaluate how a company's operating income changes with respect to a ... Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center