Understanding Percentages: Core Formulas and Concepts
A percentage is a dimensionless ratio expressing a fraction of 100. The word comes from the Latin per centum, meaning "by the hundred". Percentages standardize comparisons across sets of numbers with differing magnitudes.
Percentage = (Part / Whole) × 100%
Common Everyday Percentage Applications
- Retail Discounts: To calculate a 30% discount on a $80 jacket: $80 × 0.30 = $24 savings. Final price = $80 - $24 = $56.
- Sales Tax & GST: To add 18% tax to a $500 item: $500 × 1.18 = $590.
- Salary Increments: If your monthly pay rises from $4,000 to $4,600, your increment is (($4,600 - $4,000) / $4,000) × 100% = +15%.
| Common Fraction | Decimal Equivalent | Percentage |
|---|---|---|
| 1 / 2 | 0.50 | 50% |
| 1 / 4 | 0.25 | 25% |
| 3 / 4 | 0.75 | 75% |
| 1 / 5 | 0.20 | 20% |
| 1 / 8 | 0.125 | 12.5% |
| 1 / 3 | 0.3333... | 33.33% |
Frequently Asked Questions
Why is percentage increase not reversible by the same percentage?
When a value increases by 50% from 100 to 150, the base is 100. If 150 then decreases to 100, the new base is 150. A decrease from 150 to 100 represents a 33.33% drop (50 / 150), not 50%.
What is the difference between percentage points and percent?
Percentage points refer to the arithmetic difference between two percentages. For instance, if an interest rate moves from 5% to 7%, it increased by 2 percentage points, but rose by 40% in relative terms ((7 - 5) / 5 × 100%).