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Anonymous A
on Jul 28, 2021
Global
I want to receive updates regarding this question via email.

Absolute vs relative change

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?

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Top answer
Ian
Coach
on Jul 28, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

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?

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Agrim
Coach
on Jul 29, 2021
#1 Awarded Coach | BCG Dubai Project Leader | Master Casing in only 3 Hours | 10y in Consulting | Free Intro Call

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)

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Francesco
Coach
on Jul 28, 2021
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success: ➡ interviewoffers.com | Ex BCG | 10Y+ Coaching

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

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Antonello
Coach
on Jul 28, 2021
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

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

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