Question

How do you calculate percent change if net sales in 2006 = \[\$19,315\] and net sales in 2007 = \[ \$24,006\]?

Answer 1

Hint: We have been given the net sales of two consecutive years, 2006 and 2007 to calculate the percent change. Thus, we shall apply the formula of percent change according to which we shall first find the total amount of increase or decrease in sales or the total change in sales of the two years. Then we shall divide it by the original amount or the net sales of the year 2006 and on further multiplying by 100, we shall obtain the percent change.

Complete step by step solution:
Given that net sales in 2006 = \[\$19,315\] and sales in 2007 = \[ \$24,006\].
Percent change $=\dfrac{{{A}_{{i}/{d}\;}}}{{{A}_{o}}}\times 100$
Where,
${{A}_{{i}/{d}\;}}=$ Total amount of increase or decrease
${{A}_{o}}=$ Original Amount
The total amount of increase or decrease is calculated by finding the difference of the two quantities with respect to which the percent change is being calculated.
Here, since the percent change is being calculated for the net sales in two consecutive years, 2006 and 2007, thus we shall calculate the difference of the net sales in the years 2006 and 2007 as the total amount of increase or decrease.
${{A}_{{i}/{d}\;}}=$ net sales in 2007 - net sales in 2006
$\Rightarrow {{A}_{{i}/{d}\;}}= \$24006 - \$19315$
$\Rightarrow {{A}_{{i}/{d}\;}}= \$4691$
Now we shall substitute this value in the formula of the percent change to calculate the percent change in the net sales of two years. Also, the original amount or ${{A}_{o}}$ is equal to $19,315$ as this is the net sales of the first year.
$\Rightarrow $ Percent change \[=\dfrac{\$4691}{\$19315}\times100\]
$\Rightarrow $ Percent change \[=0.242868\times 100\]
$\Rightarrow $ Percent change \[=24.2868%\]
Therefore, the percent change is equal to \[24.2868%\] if net sales in 2006 = $\$19315$ and net sale in 2007 = $\$24,006$

Note: We must be careful while making the calculations especially while dividing a small number from a much larger number as a small mistake in division can lead to incorrect answers. Also, we must notice that the units of the two quantities (here the unit is dollars) gets cancelled on division.