How To Calculate Percent November 30, 2007Posted by Tariq Ahmed in Business Intelligence.
A simple concept, but sometimes people get tripped up when using it. This is a basic lesson in using percent correctly when comparing two numbers.
Star Destroyer production from year to the next:
2006 – 20 ships
2007 – 25 ships
Difference – 5 ships
Production has increased by X%? The difference is 5 units. Some people make the mistake by dividing the 5 into the wrong number. In reality you can divide it into 20 or 25, the difference is your wording and what exactly you’re referencing.
E.g.1) 5/20= 25%. The correct usage would be: “From 2006 numbers, production has increased 25% in 2007”
E.g. 2) 5/25=20%. The correct usage would be: “2007 production is 20% higher than 2006 production”.
The simple proofs are in the proverbial pudding:
In e.g. 1, if you only knew the 2006 number, then you would take 20 ships X 25% and get 5 ships. You therefore now know the 2007 number is 25 ships.
In e.g. 2, if you only knew the 2007 number, you would take the 25 ships X 20% and get 5 ships. You therefore now know the 2006 number had to be 5 less, or 20 ships.
This distinction is particularly important if your audience is going to apply the % across other sets of numbers.
When comparing two numbers, take care to consider what your comparing and always double check by doing the math against your numbers.
Of course this also infers that when you need to quote percents for a report, you can manipulate it as needed.