Per cent variance is also known as per cent change. The per cent variance shows the per cent increase or decrease from the original number. Per cent variance is used in areas such as business, where an analyst will calculate the per cent variance between income statement and balance sheet accounts. For example, an analyst may want to know the per cent variance between a firm's revenues from last year to this year. To find per cent variance, the analyst only needs the current period's numbers and the previous period's numbers.
- Skill level:
- Moderately Easy
Determine the original number and the new number. For example, say an analyst wants to know the per cent variance of Microsoft's revenue from June 2008 to June 2009. According to Microsoft's income statement, the June 2009 revenues were £37,984,050 and the June 2008 revenues were £39,273,000.
Subtract the old number from the new number. In our example, 58,437,000 minus 60,420,000 equals -$1,983,000.
Divide the difference by the old number to calculate the per cent variance. In our example, -$1,983,000 divided by £39,273,000 equals a per cent variance of -3.282 per cent for Microsoft's revenues from June 2008 to June 2009.
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