The relative decrease (change). Definition:
The relative decrease (change) is the difference in an indicator over two periods in time, v1 - v2, relative to the value of the indicator in the earlier period, v1.
- Namely:
- v1 - is called the reference value (original, initial number);
- v2 - is called the new value (the end value).
- In our case: v1 = 8,000, v2 = 6,274.4.
The relative decrease (change). Formula:
The relative decrease (change) =
The actual change / |v1|
(v1 - v2) / |v1| =
- Legend:
- v1 - the original number
- |v1| - the positive value of v1, |v1| >= 0. By example: |10| = 10; |-10| = 10.
- v2 - the new value
- The actual change = v1 - v2
- / - the fraction bar (division)
Why do we use |v1| in the formula instead of v1?
- Let's see what happens if we use v1 instead of |v1|:
- Choose a random negative number as the initial value: - 36.
- Choose a random positive number for the end value: 98.
Formula and calculation:
(v1 - v2) / v1 =
(- 36 - 98) / - 36 =
-134 / - 36 ≈
3.722222222222 ≈
3.72
Although the absolute difference is negative: -134, the relative decrease (change) is positive: 3.72. By using |v1| instead of v1, the error is corrected.
The relative percent decrease (change). Detailed calculations below
By multiplying a number by the fraction 100/100,
we change only the form of the result, not the result.
- 100/100 = 100% = 100 ÷ 100 = 1.
- n × 100/100 = (n × 100)/100 = (n × 100)%, any number.
The relative percent decrease (change). Formula:
The relative percent decrease (change) =
The relative decrease (change) × 100/100 =
(The relative decrease (change) × 100)/100 =
(The relative decrease (change) × 100)%
Calculate the relative percent decrease (change):
(8,000 - 6,274.4)/|8,000| =
1,725.6/8,000 =
1,725.6 ÷ 8,000 =
1,725.6 ÷ 8,000 × 100/100 =
(1,725.6 × 100 ÷ 8,000)/100 =
(172,560 ÷ 8,000)/100 =
21.57/100 =
21.57%
The relative percent decrease (change)
from the original, initial value 8,000 to the final, end value 6,274.4:
= 21.57%
The absolute (actual) difference
8,000 - 6,274.4 = 1,725.6
The relative percent decrease (change) is positive,
so we really have a relative percent decrease
(the value goes down).