What Is Percentage Change?

Percentage change is a calculation used to assess the relative performan🦋ce of a stock or other investment over a certain period.

Inv🦄estors commonly review the percentage change of their portfolio compared to the percentage change of similar investments over the same timeframe.

Percentage change can also be used to assess the change in the financial value of any item—from the increase in the price of eggs from one month to the next, to how much a car costs today compared to what it cost a y෴ear ago.

How Percentage Changes Work

Perc🎀entage changes can be calculated for a variety of variables for any items that you wish to measure over time.

For example, people might be interested in the percentage change in the amount of rainfall in thꦐeir area from season to season. Or a baseball fan might want to keep track of the percentage change in the number of hom⛎e runs that their favorite team hits yearly.

In finance, percentage change is often used to track the prices of large market indexes like the S&P 500 and 澳洲幸运5官方开奖结果体彩网:Dow Jones Indusꦫtrial Average (DJIA) and individual securities. It's also helpful when comparing the fluctuating values of different nations' 澳洲幸运5官方开奖结果体彩网:currencies.

Percentage change is also a widely used metric in business, such as when a company illustrates its revenue growth 澳洲幸运5官方开奖结果体彩网:year over year (YOY) in its 澳洲幸运5官方开奖结果体彩网:balance sheet.

Starbucks Financial Results

Often, if there is a significant percentage change, the company will try to explain why. For example, for the third quarter of 2020, Starbucks reported a 38% drop in net revenues over the same quarter in 2019 "due to the adverse impact of COVID-19."

Subsequent quarterly reports showed the gradual recovery of Starbucks' revenues and positive percentage changes in net revenues, as the business disruptions caused by COVID-19 diminished.

Moving on, Starbucks' 2024 announcement of Q4 and full fiscal year 2024 results noted total net revenues for the 2024 and 2023 fiscal years as $36.2 billion and $35.98 billion, respectively. The increase year-over-year was a positive percentage change of 0.6%.

Formula and Calculation of Percentage Change

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

$\begin{aligned}\text{Increase}=\text{New Number}-\text{Original Number}\end{aligned}$Increase=New Number−Original Number​

Next, divide the incre♔ase by the original num♐ber and multiply the answer by 100:

$\begin{aligned}\text{Percentage Increase}=\left(\frac{\text{Increase}}{\text{Original Number}}\right)\times100.\end{aligned}$Percentage Increase=(Original NumberIncrease​)×100.​

This expresses the change as a percenta🌄ge—i.e., the percentage change.

Similarly, to cal♓culate a percentage decrease, determine the difference (decrease) between the two numbers you are comparing.

$\begin{aligned}\text{Decrease}=\text{Original Number}-\text{New Number}\end{aligned}$Decrease=Original Number−New Number​

Next, divide the🐠 decrease by the original number and multಞiply the answer by 100.

$\begin{aligned}\text{Percentage Decrease}=\left(\frac{\text{Decrease}}{\text{Original Number}}\right)\times 100\end{aligned}$Percentage Decrease=(Original NumberDecrease​)×100​

Again, the result expresses the ꦗchange as a perc🎃entage—i.e., the percentage change.

Uses of Percentage Change

Investo🐈rs, comꦯpanies, and entire industries can benefit from analyzing how prices or other measures rise or fall from one period to the next.

Here are some ways that investors can use percentage change calculations to their♏ a⛦dvantage:

• Measure individual investment returns: The return on investment (ROI) for various assets, such as stocks, bonds, or mutual funds, is expressed in terms of percentage changes. This helps investors evaluate the performance of their assets over a particular time frame and compare them to other possible investments.
• Evaluate portfolios: In addition to computing the percentage changes of individual assets within a portfolio, investors can compute the change for their entire portfolio. This can be useful in determining whether their current 澳洲幸运5官方开奖结果体彩网:asset allocation is delivering the returns they need or whether they should consider 澳洲幸运5官方开奖结果体彩网:rebalancing.
• Analyze price movements: Percentage changes in the prices of stocks, commodities, or other financial instruments can also help identify trends, 澳洲幸运5官方开奖结果体彩网:volatility, and potential trading opportunities.
• Compare against benchmarks: Investors can check the percentage changes in their investments against the percentage changes in a corresponding stock index or other 澳洲幸运5官方开奖结果体彩网:benchmark to see whether their holdings are outperforming or underperforming the market. If they are significantly underperforming the benchmark, you should find out why.
• Manage risk: Investors who use 澳洲幸运5官方开奖结果体彩网:stop-loss orders to protect themselves from steep declines in the value of an investment can set their targets based on percentage changes.
  

Example of Calculating Percentage Change

Consider Grace, who bought shares of a stock at $35 per share on January 1 of last year. A year later, the stock was worth $45.50 per share. 🐷By what percentage did Grace's share value increase? 

To answer this question, first calculate the increase in price between the new and old numbers: $45.50༺ - $35 =𒁏 $10.50. Then divide the increase by the original price:

$\begin{aligned}\frac{10.5}{35}=0.3\end{aligned}$3510.5​=0.3​
Finally, to get the percentage, multiply 🔥the answer by 100 (or simply move the decimal point two sp👍aces to the right).

$\begin{aligned}0.3\times100=30\end{aligned}$0.3×100=30​
Grace's stock increased by 30%.

The Bottom Line

ꦏPercentage change is a simple calculation withꦓ many uses in finance and business.

If investors wꦇant a quick read on how a particular investment of theirs is performing, they should compare its percentage change in value for the past several years to discern a trend upward or downward.

In addition, they can compar꧅e it to that of similar inves🌳tments, such as a benchmark index.