What Is the Percentage Increase

Calculating percentages is an important skill for people working in the accounting and financial industries. Besides knowing how to calculate percentages, understanding how to apply formulas to determine how much a percentage increases or decreases can help you apply context to finances to improve your forecasting skills. Learning all about this metric may help you use this formula when creating a balance sheet or determining the growth of a business.

What is the percent increase formula?

The percent increase formula, which also can measure percent decrease, is a measurement of how much a certain figure changes over time. To calculate this number, you find the difference between the original and current values, divide that result by the original value and multiply it by 100 to convert it to a percentage. Here's an outline of the percent increase formula:

Percent increase = [(new value - original value) / original value] x 100

There's also a simplified version of this formula. Using the simplified version requires first calculating the increase, which is subtracting the original value from the new value in the longer formula. Here's what using these formulas may look like:

Increase = new value - original value

Percent increase = (increase / original value) x 100

Importance of using the percent increase formula

Businesses often calculate percentage changes when looking at their financial growth year to year. The result can help them find trends in their finances, which they can use to optimize their business budgets or create more accurate predictions for future changes. You can use the percent increase formula for any quantity that relies on measurement over time, though one of its most common uses is in investing.

Example

Percentage Increase Calculation

Percentage increase is used to determine how much a value has grown in relation to an initial value, expressed as a percentage.

The general approach to calculating percentage increase includes:

Identifying the initial (old) value and the new value.
Finding the difference between the new value and the old value.
Dividing the difference by the old value.
Multiplying by 100 to express it as a percentage.

Formula for Percentage Increase

The percentage increase is calculated using the following formula:

\[ \text{Percentage Increase} = \left( \frac{\text{New Value} - \text{Old Value}}{\text{Old Value}} \right) \times 100 \]

Example:

If a value increases from 50 to 75, the solution is:

Step 1: Find the difference: $ 75 - 50 = 25 $.
Step 2: Divide by the old value: $ \frac{25}{50} = 0.5 $.
Step 3: Multiply by 100: $ 0.5 \times 100 = 50\% $.

Percentage Increase in Business and Finance

Percentage increase is widely used in business to measure growth in revenue, sales, or profits.

Example:

If a company's revenue increases from $200,000 to $250,000, the calculation is:

Step 1: Find the difference: $ 250,000 - 200,000 = 50,000 $.
Step 2: Divide by the old value: $ \frac{50,000}{200,000} = 0.25 $.
Step 3: Multiply by 100: $ 0.25 \times 100 = 25\% $.

Real-life Applications of Percentage Increase

Percentage increase calculations are commonly used in:

Price hikes and inflation (e.g., increase in the cost of goods and services).
Salary raises (e.g., percentage increase in monthly wages).
Investment and stock market growth (e.g., increase in stock prices over time).

Percentage Increase Calculation Examples Table
Problem Type	Description	Steps to Solve	Example
Percentage Increase Calculation	Finding the percentage increase between two values.	Subtract the old value from the new value to find the increase. Divide the increase by the old value. Multiply the result by 100 to express it as a percentage.	For the increase from $50 to $75, subtract 50 from 75 to get 25, then divide 25 by 50 to get 0.5, and multiply by 100 to find a 50% increase.
Percentage Increase Between Two Quantities	Calculating the percentage increase between two quantities.	Find the difference between the two quantities (new value - old value). Divide the difference by the old value. Multiply by 100 to get the percentage increase.	If the quantity increased from 200 to 250, subtract 200 from 250 to get 50, divide 50 by 200 to get 0.25, then multiply by 100 to find a 25% increase.
Real-life Applications of Percentage Increase	Using percentage increase calculations in everyday situations.	Determining the percentage increase in sales or revenue over time. Calculating price hikes or increases in wages or salaries.	If a salary increases from $40,000 to $50,000, subtract 40,000 from 50,000 to get 10,000, divide by 40,000 to get 0.25, then multiply by 100 to find a 25% salary increase.
Percentage Increase for Investment Growth	Calculating the percentage increase in the value of an investment.	Subtract the original value of the investment from the final value. Divide the difference by the original value. Multiply by 100 to find the percentage increase in the investment value.	If an investment grows from $1,000 to $1,500, subtract 1,000 from 1,500 to get 500, divide by 1,000 to get 0.5, then multiply by 100 to find a 50% increase in investment value.