When they ask for absolute change in profits between 2 years, do they mean they want the difference without any + or - signs (eg, if profits decreased 2K, instead of saying change is -2K, absolute change is 2K?)
what does relative change mean? % difference?
Hi there,
If you have $100 and now have $50, the absolute difference is negative $50. The relative change is a 50% loss.
In terms of which one is needed, well, it depends on the case and the objective! What are you trying to solve for? What insight impacts your answer?
Absolute in this case is the $ value change (with the +/- sign included)
Relative in this case is the % change in $ value (with the +/- sign included)
Hi there,
If they say profits decreased 2K, it means they went down 2K. Not sure which other options there could be ;)
Relative change means the change relative to a previous value. If your profits are 10K and they go down to 8K, the relative change compared to the initial period is:
(8-10)/10 = -2/10 = -20%
Hope this helps,
Francesco
Yes, I confirm it. The absolute change will be measured in $ (or whatever currency) and relative in %, starting from the first-year profit
Best,
Antonello
