Calculating percentage difference is a common task in many areas of life, from finances to academics. Knowing how to accurately calculate the difference between two numbers expressed as a percentage can be a valuable tool for many different professionals. This blog post will give a detailed explanation of how to calculate percentage difference, along with providing tips and tricks to make the process simpler. Whether you’re a student, an entrepreneur or a business owner, understanding how to calculate percentage difference is important in order to make informed decisions. Knowing how to calculate this measurement will help you make more informed decisions, improve your financial understanding and make comparisons between two different numbers. This blog post will walk you through the steps of calculating percentage difference, provide resources for further reading and give you helpful tips for understanding the concept further.
How to calculate the percentage difference
The steps to determine the percentage difference between any two numbers are as follows:
1. Calculate the absolute difference between original values
First, calculate the absolute difference. The difference between two numbers on a line is known as the absolute difference. Since it represents the actual distance along a line, it must always be a positive number. Because percentage difference does not require you to take into account the relationship between two numbers, this is a good place to start. Therefore, begin by calculating X-Y, and if you get a negative result, change it to a positive result. Thats your absolute difference. For example:
We would have the following equation if we used the two values 20 and 40:
20-40= – 20; |-20| = 20
2. Calculate the average of original values
Find the average of your two initial values after the absolute difference has been calculated. Apply the following mathematical formula using our example numbers to achieve this:
20+40=60; 60/2 = 30
3. Divide the absolute difference by average
Now, all that’s left to do is divide the two numbers. You must first construct an equation with the absolute difference as the numerator and the average of the two numbers as the denominator, then calculate it to determine the absolute value:
20/30=.666666667
4. Convert into a percentage
The final step in determining the percentage difference is to multiply your value from the preceding step by 100. This is displayed in the following example:
.666666667 x 100 = 66.66666667
You might want to round this value up to the next whole number of the tenth in order to use it effectively. In this example, we will use whole numbers only. The absolute difference between the two numbers is 67%.
What is the percentage difference?
A percentage difference calculation is made by dividing the difference between two values by their average. The formula for percentage difference looks like this:
You need a few things to perform this calculation according to the formula. First, you need two distinctly different numbers. Next, you must determine an absolute difference between the two. Finding the same two numbers’ average is the third step. Finally, you can apply the percentage difference formula.
This figure is the result of a multi-step calculation that some finance professionals may find easier to use to do in an Excel spreadsheet or online calculator.
The fact that a percentage difference calculation ignores context is one of its distinctive characteristics. Since the equation is not directional, it is crucial to calculate the absolute difference and only use positive numbers.
Example of percentage difference
It is incorrect to confuse percentage difference with percentage of change because these calculations are not the same. The percentage difference aims to comprehend the difference between two numbers as a percentage of the average. Percentage change identifies the percentage between the two numbers.
Let’s look at an example of a percentage change and a percentage difference to help you better understand this:
If Smile Corporation has 40 shares of an investment, and Happy Company holds the other 20, the percentage change between the number of shares that Smile and Happy hold is 50% Thats because 20 is half of 40. Therefore, Smile Corporation holds 50% more of the shares than Happy Company
The percentage of difference can be found as follows:
Therefore, while 50% is the percentage change, it can be concluded that 67% is the percentage difference when the percentage is taken against the average
Why is the percentage difference important?
When the direction and relationship context between two similar numbers is unavailable or not crucial, an important calculation to compare them is the percentage difference.
For example:
Suppose you are the parent company of several art studio locations called Art Corp. You get two shipments of 20 pounds of clay today. You weigh them upon receiving.
One shipment is 20 lbs, and the other is 21 lbs. 36 lbs. To determine an accurate percentage of how much extra clay you received in comparison to the average of the two shipments, you can use the percentage difference calculation. After performing the calculation, the answer is 6. 58%. When there are no directional considerations, this is an effective measurement to use.
For instance, if you choose to distribute the two shipments of clay to various locations, this figure won’t indicate which studio received a higher percentage of the total. You would need to use percentage change to make that calculation, which necessitates thinking about how one value relates to another in mathematics. The percentage difference does not account for the relationship. The parent company of the two studios might not ultimately need to know which studio received more, just roughly how much more.
When determining whether the percentage difference calculation is accurate, you should keep in mind that it performs best when the two numbers you are comparing are close to one another.
How to Figure Out the Percentage of Increase Between Two Differences
FAQ
Why do we calculate percent difference?
The difference between two values divided by their average is known as the percentage difference. It is expressed as a percentage and used to calculate the difference between two related values. For instance, you could contrast the cost of a laptop this year with that of a laptop last year.
How do you calculate percentage difference manually?
How do you calculate percentage change? %E2%80%A2 ((after value %E2%80%93 before value) / before value) * 100 = % change Simply divide by the prior value after subtracting the prior value from the subsequent value. Multiply the result by 100. Add a % sign and that is your percentage change.
What is the fastest way to calculate percentage difference?
How do you calculate percentage change? %E2%80%A2 ((after value %E2%80%93 before value) / before value) * 100 = % change Simply divide by the prior value after subtracting the prior value from the subsequent value. Multiply the result by 100. Add a % sign and that is your percentage change.
