How to Calculate Profit Growth

by Carter McBride; Updated September 26, 2017

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.

Step 1

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.

Step 2

Subtract the prior profits from the current profits. In the example, the difference in profits equals $20,000, $100,000 -- $80,000.

Step 3

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.

About the Author

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.

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