Calculating percentage increases and decreases enables a business owner to keep expenditures in line with income. Nothing paints a quicker picture of your financial health than looking at past and present earnings and expenditures, and nothing shows that more clearly than percentages.
- Skill level:
Other People Are Reading
Things you need
Note your starting number. For example, in the first six months of last year, you spent £3,250 on advertising.
Compute the number for that same category in current dollars. This year, your advertising expenditures for that same period are £3,575.
Subtract the old number from the new number. In this case, £3,575 minus £3,250. You had an increase of £325.
Divide the increase ($500) by the original starting number ($5,000). The resulting decimal, .10 or 10 per cent , is the percentage increase from last year to this year. The same formula applies to decreases.
Tips and warnings
- Use the percentage of increase to evaluate gross margins, cost of goods sold, total revenue and other financial ratios to stay abreast of your company's financial well-being.
- Compare your company's percentages with those of other businesses in your industry to better understand your competition.
- Never forget to move your decimal to the right two places before writing your answer as a percent. In this example, .043 = 4.3%.