Profit is the amount of money a company makes after deducting expenses. From year to year, or even month to month, profits will change. Companies normally want profits to grow. To calculate profit growth, analysts use a percent-change formula. This shows the percentage the profit grew from one period to another. Analysts can use any period to determine the profit growth, such as weekly, monthly, quarterly, semi-annually or annually.
Determine the current profits and the previous profits for the company. For example, Company A had $100,000 in profits this year, and last year had a profit of $80,000.
Subtract the prior profits from the current profits. In the example, the difference in profits equals $20,000, $100,000 -- $80,000.
Divide the difference between the profits by the prior profits. In our example, $20,000 / $80,000 equals 0.25, or a 25 percent increase in profits.
Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.