Percentage Decrease Formula (Table of Contents)
What is the Percentage Decrease Formula?
The term “percentage decrease” refers to the comparison of the decrease in the value of the subject variable over a period of time relative to its original value.
The formula for percentage decrease can be derived by deducting the new value of the variable from its original value, then divide the result by the original value and multiply by 100% to express in terms of percentage. Mathematically, it is represented as,
Examples of Percentage Decrease Formula (With Excel Template)
Let’s take an example to understand the calculation of the Percentage Decrease in a better manner.
Example #1
Let us take the example of John, who invested $500 to purchase 10 equity shares of company XYZ Ltd last year. In the current year, he again purchased 15 more equity shares of the company for $600. Check whether the price has declined in the current year and if yes, then calculate the percentage decrease in the equity share price.
Solution:
Therefore, it can be seen that the equity share price has declined from $50 last year to $40 in the current year.
Percentage Decrease is calculated using the formula given below
Percentage Decrease = (Equity Share Price Last Year – Equity Share Price Current Year) / Equity Share Price Last Year * 100
- Percentage Decrease= ($50 – $40) / $50 * 100
- Percentage Decrease= 20%
Therefore, the equity share of XYZ Ltd decreased by 20% during the last year.
Example #2
Let us take the example of crude oil price that has witnessed significant volatility with a downward trend during the last year. The crude price was $68.58 per barrel as of June 22, 2018, while the crude price has gone down to stand at $57.43 per barrel today, i.e. June 21, 2019. Calculate the percentage decrease in the crude oil price.
Solution:
Percentage Decrease is calculated using the formula given below
Percentage Decrease = (Crude Price One Year Back – Crude Price Today) / Crude Price One Year Back * 100
- Percentage Decrease = ($68.58 – $57.43) / $68.58 * 100
- Percentage Decrease = 16.26%
Therefore, the crude price had decreased by 16.26% during the last year.
Example #3
Let us take the example of Apple Inc.’s total asset size. As per the annual report for the year ending on September 29, 2018, the total asset size had decreased from $375,219 million in 2017 to $365,725 million in 2018. Calculate the percentage decrease in Apple Inc.’s asset size during the last one year.
Solution:
Percentage Decrease is calculated using the formula given below
Percentage Decrease = (Total Assets in 2017 – Total Assets in 2018) / Total Assets in 2017 * 100
- Percentage Decrease = ($375,219 – $365,725) / $375,219 * 100
- Percentage Decrease = 2.53%
Therefore, the total asset size of Apple Inc. had decreased by 2.53% during the financial year 2018.
Explanation
The formula for percentage decrease can be derived by using the following steps:
Step 1: Firstly, note the original value of the variable at the beginning of the period.
Step 2: Next, determine the new value of the variable at the end of the period, which is lower than its original value.
Step 3: Next, determine the change or decrease in the value of the variable over the period of time by deducting the new value of the variable from its original value, as shown below.
Decrease in Value = Original Value – New Value
Step 4: Finally, the formula for percentage decrease can be derived by dividing the change in value by the original value of the subject variable and then multiplying the result by 100% to express the result in terms of percentage, as shown below.
Relevance and Uses of Percentage Decrease Formula
It is one of the most used mathematical formulas as it is used to measure the relative decrease in the value of many real-life items. It can be seen as an important concept most of the items around us depreciate in value over a period of time. In fact, the percentage decrease formula is predominantly used in the financial world to assess the percentage decline in the value of an investment, the rate of decrease in the asset size of a company, etc. The formula for percentage decrease also finds application in the economic world where it is used to track the decline in commodity prices like crude, gold, aluminum, etc. Basically, the formula for percentage change indicates the degree of change which can be used to compare the change in the value of the variable across time.
Percentage Decrease Formula Calculator
You can use the following Percentage Decrease Calculator
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