Net Change Formula

What is Net Change Formula?

Net Change formula is used in order to calculate the change in the value of anything from its previous values. It is mainly used for calculating the change in the closing price of the stocks, mutual funds, bonds, etc. from its closing price on the previous day.

The term “Net Change ” is used as the measure to calculate the difference between the current closing prices with the previous period’s closing price over the given period of time. If required, it can also be calculated in percentage terms by the user.

The formula is represented as below:

Also, in percentage terms, the formula is mathematically represented as below:

Here,

• Current Period’s Closing Prices = Closing price at the end of the period when the analysis is done.
• Previous Period’s Closing Price = Price at the beginning of the period for which analysis is to be done.

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Net Change Formula (wallstreetmojo.com)

Explanation

You can calculate net change by using the following steps:

Step 1: Firstly, determine the Closing price at the end of the period for which the analysis is conducted.

Step 2: In the next step, determine the closing price of the previous period or price at the beginning of the period for which the analysis is conducted.

Step 3: Finally, deducting the values arrived in step 2 from step 1.

Step 4: Also, if a net change is to be calculated in percentage terms, than the values arrived in step 3 is divided with step 2 values.

How to Calculate Net Change (with Excel Template)

Let’s see some simple to advanced examples to understand it better.

Example #1 – Positive Net Change

Let take an example of the prices of the stock of a company AB. At the end of the current session, the prices of the stock closed at $50.55. The prices of the stock of the same company closed at $49.50 at the end of the prior trading session. What is the net change in the prices of the stock of the company during the period?

Solution:

Use the given data for the calculation of net change.

Calculation of net change can be done as follows:

Net Change = $50.55 – $49.50

Net Change will be –

Net Change = $1.05

Thus the net change in the stock price from prior trading session end to a current trading session at is $1.05.

Example #2 – Negative Net Change

Let take another example of the prices of the stock of a company Info ltd. The prices of the stock of the company at the end of the current session closed at $150.00, but the prices of the stock of the same company closed at $165.50 at the end of the prior trading session. What is the net change in the prices of the stock of the company during the period?

Solution:

Use the given data for the calculation of net change.

Calculation of net change can be done as follows:

Since the prior trading session price was greater than that of the current session’s closing price, so there will be a negative net change in the prices of the stock of the company during the period.

Net Change = $150.00- $165.50

Net Change will be –

Net Change = -$15.50

Thus the net change in the stock price from the prior trading session end to the current trading session at is -$15.50.

Example #3

Let take another example of the company. One of the technical analysts wants to conduct research on the prices of the stock of the company. He wants to know the value of the change in the prices of the company is after one month. For this, he got the following information:

• Current session’s closing price of the stock of the company: $1,100
• Prior session’s closing price of the stock of the company (one month before): $1,000

What is the net change in the prices of the stock of the company during the period in value and in percentage terms?

Solution:

Calculation of net change can be done as follows:

Net Change = $1,100- $1,000

Net Change will be –

Net Change = $100

Calculation of Net change (%) can be done as follows:

Net Change (%) = [($1,100 – $1,000) / $1,000] * 100

Net Change (%) will be –

Net Change (%) = 10%

Thus the net change in the stock price from the prior trading session end to the current trading session is $100 or 10%.

Net Change Formula Calculator

You can use this calculator.

Relevance and Uses

Net Change helps in knowing the difference between the current closing price and the previous closing price of different items. It is of great importance and uses in case of the investors making the analysis of stocks, mutual fundsMutual FundsA mutual fund is an investment fund that investors professionally manage by pooling money from multiple investors to initiate investment in securities individually held to provide greater diversification, long term gains and lower level of risks.read more, bonds BondsA bond is financial instrument that denotes the debt owed by the issuer to the bondholder. Issuer is liable to pay the coupon (an interest) on the same. These are also negotiable and the interest can be paid monthly, quarterly, half-yearly or even annually whichever is agreed mutually.read more, etc., as it is one of the most commonly reported data that forms the basis of investor’s opinion.

It is also used by almost all technical analysts for their analysis of the prices of these securities as their analysis charts are prepared considering these data. Thus it measures the performance of the different securities for any time frame as required by the analyzer, be it daily, monthly, or annually.

Recommended Articles

This has been a guide to the net change formula. Here we discuss how to calculate net change and its percentage (%) along with examples and a downloadable excel template. You can learn more about financial analysis from the following articles –

• Payout Ratio Formula
• Break-Even Price
• Calculate Percentage Change
• Calculate Basis Points
• Effect Size