How do you calculate percentage growth? Whether you’re analyzing financial data, tracking population growth, or evaluating business performance, understanding how to calculate percentage growth is a fundamental skill. Percentage growth is a way to express the change in a value over a specific period, and it’s crucial for making informed decisions and comparisons. In this article, we’ll explore the formula for calculating percentage growth and provide practical examples to help you master this essential concept.
Percentage growth is calculated by comparing the difference between two values to the original value, and then multiplying the result by 100 to express it as a percentage. The formula for percentage growth is as follows:
Percentage Growth = [(New Value – Original Value) / Original Value] x 100
Let’s break down the formula and understand each component:
1. New Value: This is the value after the change or the value at the end of the period you’re analyzing.
2. Original Value: This is the value before the change or the value at the beginning of the period.
3. Difference: The difference between the new value and the original value.
4. Percentage: The result of the difference divided by the original value, multiplied by 100.
To illustrate how to calculate percentage growth, let’s consider a few examples:
Example 1: Population Growth
Imagine a city had a population of 100,000 in 2010 and 120,000 in 2020. To calculate the percentage growth in population, we’ll use the formula:
Percentage Growth = [(120,000 – 100,000) / 100,000] x 100
Percentage Growth = (20,000 / 100,000) x 100
Percentage Growth = 0.2 x 100
Percentage Growth = 20%
The population of the city grew by 20% over the 10-year period.
Example 2: Financial Growth
Suppose a company had a net income of $50,000 in 2019 and $60,000 in 2020. To calculate the percentage growth in net income, we’ll use the formula:
Percentage Growth = [(60,000 – 50,000) / 50,000] x 100
Percentage Growth = (10,000 / 50,000) x 100
Percentage Growth = 0.2 x 100
Percentage Growth = 20%
The company’s net income grew by 20% from 2019 to 2020.
In conclusion, calculating percentage growth is a straightforward process that involves finding the difference between two values, dividing that difference by the original value, and multiplying the result by 100. By understanding this formula and applying it to various scenarios, you can gain valuable insights into the changes and trends in different aspects of your life, whether it’s personal, professional, or financial.
