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Percentage Decrease formula

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 Description of the Percentage Decrease formula

The percentage decrease formula calculates the proportional reduction of a value from its original state to a new, lower state. It is commonly used to measure the relative change in a quantity and is expressed as a percentage.

  Formula

\[ \text{Percentage decrease} = \frac {\text{Decrease in Value}} {\text{Original Value}} \ \]

Example of application for the percentage decrease formula

You are analyzing the financial performance of a company and comparing its net profit from two consecutive years.

  • In Year 1, the company reported a net profit of $500,000.
  • In Year 2, the net profit decreased to $400,000.

Calculation using the Percentage Decrease Formula

Percentage Decrease = Decrease in Value / Original Value × 100

Percentage Decrease = (500,000 - 400,000)/500,000 x 100 = 20%

Interpretation

The net profit experienced a 20% decrease from Year 1 to Year 2. This percentage decrease provides a clear measure of the relative decline in the company's profitability over the specified period.