Analysts can use financial statements to determine percent variance for companies.
Percent variance is also known as percent change. The percent variance shows the percent increase or decrease from the original number. Percent variance is used in areas such as business, where an analyst will calculate the percent variance between income statement and balance sheet accounts. For example, an analyst may want to know the percent variance between a firm's revenues from last year to this year. To find percent variance, the analyst only needs the current period's numbers and the previous period's numbers.
Instructions
1. Determine the original number and the new number. For example, say an analyst wants to know the percent variance of Microsoft's revenue from June 2008 to June 2009. According to Microsoft's income statement, the June 2009 revenues were $58,437,000 and the June 2008 revenues were $60,420,000.
2. Subtract the old number from the new number. In our example, 58,437,000 minus 60,420,000 equals -$1,983,000.
3. Divide the difference by the old number to calculate the percent variance. In our example, -$1,983,000 divided by $60,420,000 equals a percent variance of -3.282 percent for Microsoft's revenues from June 2008 to June 2009.
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