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Q&A #5442

Teachers' Lounge Discussion: Percentage of change

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From: John <jecwobble@ispwest.com>
To: Teacher2Teacher Public Discussion
Date: 2002111209:07:20
Subject: Increase vs. decrease

I like the simplicity of "(new - old)/old" and in fact have used that
myself to remember the principle. My question is in regard to the
percentage of change when the old number is a negative value.

Let's say you are comparing annual net earnings. In 2000, your company
was in the red $50 (just to keep it simple), but in 2001 your company
was in the black $200. That's a $250 increase which logic would say
was a 500% increase. However the simple formula above returns a 500%
decrease:

(200 - (-50))/-50 = -5

Should the formula actually be "(new - old)/absolute value(old)"?

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