# How to Calculate Gain: Formula and Steps

Determining Percentage Gain or Loss
1. Take the selling price and subtract the initial purchase price. …
2. Take the gain or loss from the investment and divide it by the original amount or purchase price of the investment.
3. Finally, multiply the result by 100 to arrive at the percentage change in the investment.

Gain is an important concept in finance, business, and economics, and understanding how to calculate gain is key to accurately analyzing financial data and making informed decisions. Knowing how to calculate gain can also be useful for tracking the performance of investments and making sure that investments are meeting expected returns. This blog post will provide a detailed guide on how to calculate gain, discuss the importance of understanding gain, and provide tips to help you interpret and analyze the results of your calculations. Having a strong foundation in calculating gain can help you make smart decisions in any financial context.

## Why do you need to calculate gain?

For a number of reasons, including to determine whether the company is turning a profit on the products or services it sells, you should calculate a business’ net gain on a regular basis. If the business is profitable based on its sales activity, you may decide to carry on with business as usual. However, if the business is losing money rather than making it, you might decide to change the way things are made or how much they cost in order to turn a profit.

In order to determine its overall value at the end of a fiscal year, a company may also calculate its net gain. A strong indication that a company is expanding annually is when its value increases from the previous year.

## What is net gain or loss?

The gains or losses that a person or business experiences as a result of selling an asset, writing off an asset, or making an investment are known as net gains or losses, which are also sometimes referred to as capital gains or losses. Additionally, net gains and losses are used to calculate a company’s profitability and remaining funds after deducting costs. The revenue from sales of goods is added to the cost of purchasing and/or producing those goods to determine a company’s net gain or loss.

Net gains and losses are another way to keep track of investment profits or losses. Knowing an investment’s losses and gains can help you assess how it is doing and whether any changes are needed to keep making money. The net loss or gain on investments is the difference between the investment’s original cost and its eventual profit.

## Formula to calculate gain

Calculate the net gain of various business scenarios using the following formulas:

### Investments

Net gain is calculated as [investment’s initial purchase price] minus [investment’s selling price].

### Assets

Net gain is equal to [amount the asset is sold or exchanged for] minus [net cost to acquire asset].

### Sales

[Sales price][production costs] = net gain

### Net income

Net gain is calculated as [total revenue for a time period] – [expenses and operating costs for a time period] – [taxes for a time period].

## How to calculate gain

The steps you can use to determine net gain are as follows:

### 1. Determine the cost

Determine the amount of money that was invested, spent on producing a product, or used to operate your business over a specific time period. For instance, if you invested \$500 total and bought 50 shares of stock at \$10 each, you have made a \$100 investment. If operating expenses for your business over the past year totaled \$5,000, you would have put \$5,000 into it.

### 2. Calculate the return

Calculate the amount of money you have earned through investments, product sales, or running a business over time. For instance, you would profit \$250 if you sold the 50 shares you bought for \$10 each at \$15 each. You would make \$10 in profit for each product sold if you spent \$10 to manufacture something and sold it for \$20.

### 3. Subtract cost from return

Subtract the total cost from the total return once you are aware of your investment and return amounts. For instance, you would do the math as follows: 750 – 500 = 250 if you earned \$750 on an investment that cost you \$500.

### 4. Add or subtract dividends and taxes

Add or deduct these from the gain amount if you received dividends or had to pay taxes on the investment. For instance, if you invested \$250 and received \$50 in dividends, your new net gain is \$300. You would compute the following equation if your \$250 investment profit was subject to a 5% tax rate:

[Investment income] x [Decimal tax rate] = Taxes paid

[investment earnings][taxes paid] = net gain

250 x .05 = 12.5

250 – 12.5 = 237.5

### 5. Turn your net gain into a percentage

While steps one through four can be used to calculate a number, many businesses report net gains or losses as a percentage. Divide the net gain by the initial investment to convert the value from step four into a percentage, then multiply this result by 100. For instance, if your net gain is \$300 and your initial investment was \$500, you would compute as follows:

300 / 500 = .6

.6 x 100 = 60

In this example, you have a net gain of 60%.

## Example of calculating gain

An illustration of how to determine net gain is as follows:

Holdings Company invested \$2,000 to buy 100 stocks at a price of \$20 each. After a year, the company decided to sell its stock. Holdings was able to sell all 100 stocks for a combined profit of \$2,500 by selling each one for \$25. The company also received \$100 in dividends on the investment. The company calculated the following amounts to determine its net profit from this investment:

Profit – investment: 2,500 – 2,000 = 500

Gain plus any dividends: 500 + 100 = 600

Gain divided by total investment times 100 equals 30 percent (600/2,000) x 100.

This demonstrates that Holdings Company’s stock sales resulted in a net gain of \$600, or 30%.

## FAQ

What is gain percentage?

Gain Realized Formula = Selling Price – Buying Price. Here, Selling price > Buying price.

How do I calculate 30% gain?

To express a profit or gain using percentages is to use the term “percentage gain.” In this manner, a person can more quickly and easily comprehend the essentials or variables of a business transaction. Finding an amount’s increase or decrease can be helpful on occasion.

How do I calculate 20% gain?

Divide the outcome by the original value after subtracting the original value from the new value. Multiply the result by 100. The answer is the percent increase. Check your answer using the percentage increase calculator.