How to Calculate the Percentage of Change in an Income Statement
Income statements consist of vital information pertaining to your business, such as your business’s net income, revenue and expenses. Reviewing your income statements offers you the opportunity to visually understand in which areas you’ve experienced growth or loss. When looking at different monthly income statements, you may want to calculate the percentage of change for certain data, because percentages better represent your growth or loss than actual numbers. Financial instructions may also request your percentage of change in certain areas before approving you for a line of credit or a loan.
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Instructions
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Assess two different income statements. A percent change requires you to look at a previous income statement and a later income statement. For example, suppose you wanted to look at the percent change for your June income statement in comparison with your May income statement; you must have both documents.
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Write down each piece of data you wish to compare, labeling the data as either data from your new income statement or data from your older income statement. For example, if you wanted to review the percent change in revenue, expenses and net income, write down all three figures from both statements.
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Take one figure from the newest income statement and subtract the same figure from the older income statement. Mark the difference as “XXX Difference,” where XXX is the type of data you’re comparing. Do this for each piece of data you wish to compare. For example, if you want to find the percentage of change of revenue for your June and May income statements, take your June revenue and subtract your May revenue, marking the difference as “Revenue Difference.”
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Take each difference and divide it by the older income statement data. Multiply the quotient by 100 to find the percentage of change. For example, suppose you want to find the percentage of change in net income for your June and May income statements. Your net income for May was $1,000 and $2,000 for June. Take 2,000 minus 1,000 to find 1,000. Take 1,000 divided by May’s net income of 1,000 to find 1. Multiply 1 by 100 to find 100. Your net income from May to June changed 100 percent.
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Tips & Warnings
If the difference is positive, your percent change will always be positive. If the difference is negative, your percent change will always be negative.
