The percentage reduction is used to compare the decay/reduction in two quantities with different initial values. For example, consider the following two businesses. In the table below, we can see that both businesses reduced by $5,000. Does this mean that they are decaying at the same rate? No, because the decay has to be compared with the initial value. We use the percentage reduction formula for this.
Final Value of the Business
What Is the Percentage reduction Formula?
The percentage reduction formula is the ratio of the reduction in the quantity to its initial value multiplied by 100. Since the percentage has to be a positive quantity, we take the absolute value of the initial value. i.e.,
From the previous example,
Reduction in business-1 = 15000 - 10000 = $5000.
Reduction in business-2 = 35000 - 30000 = $5000.
Let us calculate the percentage reduction in each of business-1 and business-2.