Just imagine how troublesome it would be if you had to mention every digit of the company’s expenditure and income figures.
Apart from being difficult to say, people who hear it will also have difficulty digesting it. Therefore, you need to know how to calculate the percent increase so you can report company performance results more effectively.
With percentages, the performance of a business becomes easier to monitor. That is one of the reasons why in business financial management the percentage increase is more often used to report the results of analysis of business development over time.
So that you don’t get confused any more, let’s learn how to calculate the percent increase in this article with Labamu!
Get to know the concept of percentage
Before discussing how to calculate the percent increase, Labamu wants to invite you to understand the concept of percentage first.
In mathematical language, percentage is a way to express a number as a fraction of 100 and is represented by the symbol “%”.
This ratio is usually used to express a portion of an integer or to compare two or more numbers.
For example, in the parking lot there are 100 cars and 25 of them are white. So, we can say that 25% of the cars in the parking lot are white.
Another example is the price of sugar in February which was IDR 10,000.00 and then rose to IDR 11,000.00 in March. So, the increase in sugar prices in the last two months was 10%.
Well, in financial management, percentage increases are usually used to express sales results, increases in production costs, and many others. But in principle, percentages are used to represent data so that it is easier to understand by readers and people who hear it.
The Importance of Calculating the Increase Percentage for Business
Basically, percent is a form of number that describes some part of the total existing data. In business, knowing the percentage increase can provide several benefits. Among them are the following:
- Facilitates the process of analyzing all kinds of things related to business financial management
- Provides an overview of progress, both progress and setbacks in business performance from time to time
- Make company targets easier to understand and monitor progress
- Become a roadmap for business development from year to year
- It is an attraction that can convince investors, especially if the percentage increase in business continues to grow
- Becomes a tool for measuring ‘health’ and financial indicators as well as overall company performance
- Becomes the basis for future company strategic planning, both for HR, production, marketing, and so on
- Becomes a basic calculation in making profit and cost projections to ensure business continuity and development.
How to Calculate Percent Increase
How to calculate the percent increase is actually easy in principle, you need to compare the data before and the data after then multiply by 100%.
To make it clearer, below Labamu will share how to calculate the percent increase that you can use, complete with examples. Listen, come on!
Case Illustrations
To respond to the increase in raw material prices, Mrs Untung and Mr Untung, who are iced coffee entrepreneurs, plan to increase the selling price of their coffee.
Bu Untung’s Es Kopi, which previously sold iced coffee for IDR 10,000.00 per cup, has now increased the price to IDR 12,500.00 per glass.
Meanwhile, Pak Untung Coffee Shop, which previously sold its iced coffee at Rp. 15,000.00 per cup, has now increased its selling price to Rp. 18,000.00.
Approximately what percentage will the turnover of Iced Kopi Bu Untung and Pak Untung’s Coffee Shop increase this month?
How to Calculate the Percent Increase in Selling Price
Percentage Increase = (Final Value-Initial Value) / Initial Value x 100%
- Percentage Increase in Selling Price of Bu Untung’s Iced Coffee
Increase Percentage = (12,500 – 10,000) / 10,000 x 100%
= 2.500 / 10.000 x 100%
= 25%
- Percentage Increase in Selling Price of Pak Untung Coffee Shop
Increase Percentage = (18,000 – 15,000) / 15,000 x 100%
= 3.000 / 15.000 x 100%
= 20%
So, the estimated increase in Iced Kopi Bu Untung’s turnover this month is 25%. Meanwhile, Pak Untung Coffee Shop is 20%.
How to Calculate the Percent Increase in Real Sales Turnover
According to previously calculated financial projections, the turnover of Es Kopi Bu Untung is estimated to increase by 25% while Kedai Kopi Pak Untung will increase by 35%.
So, to measure their business performance, Mrs Untung and Mr Untung again carried out calculations based on the real income they received from selling iced coffee this month.
It is known that last month the turnover of Bu Untung’s Ice Coffee was IDR 50,000,000.00 and this month the turnover increased to IDR 55,000,000.00.
At Pak Untung Coffee Shop, last month’s turnover was IDR 50,000,000 and this month it rose to IDR 60,000,000.00.
So, what is the percentage increase in the turnover of Es Kopi Bu Untung and Kedai Kopi Pak Untung this month?
Percentage Increase = (Final Value-Initial Value) / Initial Value x 100%
- Percentage Increase in Turnover of Bu Untung’s Iced Coffee
Increase Percentage = (55,000,000 – 50,000,000) / 50,000,000 x 100%
= 5.000.000 / 50.000.000 x 100%
= 10%
- Percentage Increase in Turnover of Pak Untung Coffee Shop
Increase Percentage = (60,000,000 – 50,000,000) / 50,000,000 x 100%
= 10.000.000 / 50.000.000 x 100%
= 20%
Implications in Business
From these calculations, it is known that the financial performance of Pak Untung’s Coffee Shop is better than Bu Untung’s Iced Coffee, seeing that Pak Untung was able to achieve his financial projections while Bu Untung was not.
Armed with this information, entrepreneurs can make adjustments regarding the business strategy they implement.
At this point, you understand that knowing how to calculate the percent increase is really important for business, right?
So, apart from the manual method as above, you can also use Excel or an online calculator to calculate the percent increase. However, whatever the method, you will still have difficulties if you are not used to documenting your business’s financial transactions.
Therefore, make sure you use the Labamu application which is suitable for the MSME business you run. Come on, hurry up and download the application via Google Play or the App Store!
