A percent change analysis shows how two items changed as a percentage from one period to another period. Used on a balance sheet, a percent change analysis shows how a balance sheet account changes from year to year, or quarter to quarter. The balance sheet accounts are assets, liabilities and stockholders' equity. Percent change analysis is important for managers and investors to see how a company is growing or retracting from year-to-year.
Find the balance sheet accounts you want to analyze and find the beginning and ending results of the account. For example, last year Firm A's "Cash" account had $400 and this year Firm A's "Cash" account had $700.
Subtract the current account from the previous account to determine the change in the account. In our example, $700 minus $400 equals $300.
Divide the change in the account by the old account balance to determine the percent change. In our example, $300 divided by $400 equals a change of 0.75, or multiply by 100 to equal 75 percent.
Repeat the steps for any other balance sheet accounts to analyze.
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.