17 Nov 2022

Posted on:

30 May 2021

2

# Resolved:Why did he subtract 1from the Var %?

Why did he subtract 1from the Var %?

Instructor
Posted on:

30 May 2021

4

Hi Matthew,

Good to hear from you!

The idea is that you divide this year's value (let's say 115) by last year's value (let's say 100).
So, we have 115/100 = 1,15
However, to obtain the percentage of change, we need to subtract 1 and will get 0.15 = 15%.

In fact if this year's value was 100 and last year's value was 100, we would have:
100/100 -1 = 1 - 1 = 0% change.
Makes sense, right?
Best,
Ned

Posted on:

17 Nov 2022

2

Hi!
Though of expanding on Ned's explanation above.
Let's use the same example, with this year's value as 115 and last year's value as 100.
The formula for Var % would be:
(This year - Last year) / Last year
---> (115 - 100) / 100
---> (115/100) - (100/100)
---> 1.15 - 1 = 0.15 or 15%

Looking at the breakdown/steps for the formula applied above, we can interpret the formula in this way:
-> we want to find how much difference or change happened from last year to this year
-> in other words, from our last year's value of 100, how much percentage was changed (added, in this case)
-> so we found that 15 was added
-> and so how much percentage is an increase of 15 from our last year's value (a.k.a. ratio of 15/100)
-> so we get that it's about 15%. Hence, there was a 15% increase/change.

May have stretched that a bit but hope that somehow helps.

Regards