Unlocking Growth Insights- A Step-by-Step Guide to Calculating Percentage Growth Over Last Year

How to Calculate Percentage Growth Over Last Year

Calculating percentage growth over last year is an essential skill for businesses, investors, and individuals alike. It provides a clear and concise way to understand the change in value or performance over a specific period. Whether you’re analyzing financial statements, assessing business growth, or simply curious about the change in a particular metric, knowing how to calculate percentage growth over last year is invaluable. In this article, we will guide you through the process of calculating percentage growth and provide you with practical examples to help you better understand the concept.

Understanding the Formula

To calculate percentage growth over last year, you need to follow a simple formula. The formula is as follows:

Percentage Growth = [(Current Value – Last Year’s Value) / Last Year’s Value] x 100

This formula calculates the difference between the current value and the last year’s value, divides it by the last year’s value, and then multiplies the result by 100 to express it as a percentage.

Step-by-Step Guide

Now that you understand the formula, let’s go through the steps to calculate percentage growth over last year:

1. Identify the current value: Determine the value you want to analyze. This could be a financial figure, such as revenue or profit, or any other metric, such as customer count or sales volume.

2. Find the last year’s value: Locate the corresponding value from the previous year. This information should be readily available in financial statements, annual reports, or historical data.

3. Subtract last year’s value from the current value: Calculate the difference between the current value and the last year’s value.

4. Divide the difference by the last year’s value: Divide the difference obtained in step 3 by the last year’s value.

5. Multiply the result by 100: Multiply the result from step 4 by 100 to express it as a percentage.

6. Interpret the result: Analyze the percentage growth to understand the change in value or performance over the specified period.

Example

Let’s say you want to calculate the percentage growth in revenue for your business over the last year. The current revenue is $500,000, and the revenue from the previous year was $400,000.

1. Current Value: $500,000
2. Last Year’s Value: $400,000
3. Difference: $500,000 – $400,000 = $100,000
4. Divide the difference by the last year’s value: $100,000 / $400,000 = 0.25
5. Multiply the result by 100: 0.25 x 100 = 25%
6. Interpretation: The revenue of your business has grown by 25% over the last year.

Conclusion

Calculating percentage growth over last year is a straightforward process that allows you to understand the change in value or performance over a specific period. By following the formula and steps outlined in this article, you can easily calculate percentage growth and gain valuable insights into your business, investments, or personal goals. Remember to interpret the result accurately and use it as a tool to make informed decisions.