Percentage Decrease formula (ID: 301) [Edit]
Description of the Percentage Decrease formula
The percentage decrease formula calculates the proportional reduction of a value from its original state to a new, lower state. It is commonly used to measure the relative change in a quantity and is expressed as a percentage.
Formula
\[ \text{Percentage decrease} = \frac {\text{Decrease in Value}} {\text{Original Value}} \ \]
Example of application for the percentage decrease formula
You are analyzing the financial performance of a company and comparing its net profit from two consecutive years.
- In Year 1, the company reported a net profit of $500,000.
- In Year 2, the net profit decreased to $400,000.
Calculation using the Percentage Decrease Formula
Percentage Decrease = Decrease in Value / Original Value × 100
Percentage Decrease = (500,000 - 400,000)/500,000 x 100 = 20%
Interpretation
The net profit experienced a 20% decrease from Year 1 to Year 2. This percentage decrease provides a clear measure of the relative decline in the company's profitability over the specified period.