Learn Formula For Calculating The Relative Change - Cuemath

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Relative change formula calculates the relative difference or change, used to compare two quantities while taking into account the "sizes" of the things being compared. The comparison is expressed as a ratio and is a unitless number. The relative change is a fraction that describes the size of the absolute change in comparison to the reference value. By multiplying these ratios by 100 they can be expressed as percentages so the terms percentage change. Let us understand the relative change formula using solved examples.

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What is Relative Change Formula?

Relative change shows the change of a value of an indicator in the first period and in percentage terms, i.e. relative change is calculated by subtracting the value of the indicator in the first period from the value of the indicator in the second period which is then divided by the value of the indicator in the first period and the result is taken out in percentage terms. Relative change formula is given by,

Relative Change = (Final value – Initial value) / Initial value * 100%

or

Relative Change = Absolute chage / Initial value * 100%

where,

Absolute change = Final Value - Initial Value

Let's practice some problems using Relative Change Formula

Solved Examples Using Relative Change Formula

1. Example 1:You have invested a sum of $12,000 in a Bank and next year the value of your investment increased to $13,000. Find the relative change of your account balance using Relative Change Formula.

   Solution:

   Given: Final Value = $13,000, New Value = $12,000

   According to the Relative Change Formula,

   Relative Change = (Final value – Initial value) / Initial value × 100%

   = [(13,000 - 12,000)/12000] × 100

   = 8.33%

   Answer: The relative change is 8.33%.

2. Example 2:You have invested a sum of $30,000 in a Bank and next year the value of your investment increased to $33,000. What is the relative change of your account balance?

   Solution:

   Given: Final Value = $33,000, New Value = $30,000

   According to the Relative Change Formula,

   Relative Change = (Final value – Initial value) / Initial value * 100%

   = [(33,000 - 30,000) / 30,000] × 100

   = 10%

   Answer: The relative change is 10%.

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