How to Calculate Profit Growth

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Profit is the amount of money a company makes after deducting expenses. From year to year, or even month to month, profits will change. Companies normally want profits to grow. To calculate profit growth, analysts use a percent-change formula. This shows the percentage the profit grew from one period to another. Analysts can use any period to determine the profit growth, such as weekly, monthly, quarterly, semi-annually or annually.

A company's income statement discloses its profits or losses.
A company's income statement discloses its profits or losses.

Step 1

Determine the current profits and the previous profits for the company. For example, Company A had $100,000 in profits this year, and last year had a profit of $80,000.

Determine the current profits and previous profits for the company.
Determine the current profits and previous profits for the company.

Step 2

Subtract the prior profits from the current profits. In the example, the difference in profits equals $20,000, $100,000 -- $80,000.

Subtract prior profits from current profits.
Subtract prior profits from current profits.

Step 3

Divide the difference between the profits by the prior profits. In our example, $20,000 / $80,000 equals 0.25, or a 25 percent increase in profits.

Divide the difference between the profits by the prior profits.
Divide the difference between the profits by the prior profits.

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