# Monthly change formula logic.

I need an explanation of the formula: monthlyChange=(newValue-oldValue)/oldValue Why to divide by old value? Apparently the difference is described well just via subtracktion "newValue-oldValue".

• (newValue-oldValue)/oldValue times 100% would be the percentage change per month. Oct 15, 2018 at 5:28
• The divisor is always the number that we are comparing to. So in this case, we are calculating the percent change, with respect to the old value. Oct 15, 2018 at 5:31
• "The divisor is always the number that we are comparing to". Why? Just subtracting is enough to see the difference i.e. change... Oct 15, 2018 at 13:34

There exist different concepts changes:

1. $$\text{Absolute change=AC=newValue-oldValue}$$

Let´s inspect two cases:

a) $$AC_1\text{=130-100}=30$$

b) $$AC_2\text{=30-10}=20$$

Here $$AC_1\color{red}>AC_2$$.

2. Now we calculate the relative change, $$RC$$.

a) $$RC_1=\frac{\text{130-100}}{100}=0.3=30\%$$

b) $$RC_2=\frac{\text{30-10}}{30}=\frac23\approx 66.67\%$$

Here we have $$RC_1\color{red}

These two concepts of measuring changes can result in different relations, but it must not. It depends on the context which concept is appropriate.