Revenue represents the money a company generates from sales and is a key indicator of a company’s ability to attract customers. Revenue percent change measures the proportion by which sales increased or decreased between two periods compared to the older period’s sales. Business owners commonly calculate the percent change in revenue to measure a company’s growth and progress. The metric provides valuable information because it shows the relative size of the sales change. The higher the percentage, the stronger the improvement is.
Subtract the older period’s revenue from the newer period’s revenue to calculate the dollar change in revenue between the two periods. A positive result means revenue increased, while a negative number indicates revenue declined. You can find a company’s revenue at the top of its income statement, or profit and loss statement.
For example, assume your business generated $1.3 million in revenue the most recent year and $1 million in revenue the year before that. Subtract $1 million from $1.3 million to get $300,000:
$1.3 million newer period revenue - $1 million older period revenue = $300,000 increase
Divide your result by the older period’s revenue.
In the example, divide $300,000 by $1 million to get 0.3:
$300,000 increase / $1 million older period revenue = 0.3
Multiply your result by 100 to convert it to a percentage to get the percent change in revenue.
In the example, multiply 0.3 by 100 get 30 percent:
0.3 X 100 = 30 percent increase in revenue
This means, in the most recent year, your business generated revenue that was 30 percent higher than in the previous year.
Calculate the revenue percent change between two consecutive or nonconsecutive periods of any size, such as months, quarters or years. For example, you might calculate the revenue percent change between the first and second months of the current year or between this year’s and last year’s third quarters.