# How to Calculate the Percentage Gain on an Equity Tansaction

by Bryan Keythman

An equity transaction occurs when an investor buys and sells an ownership position in an investment, such as stock in a public or private company. A percentage gain on an equity transaction is the amount of profit you made from the transaction as a percentage of the purchase price. A higher percentage gain represents a higher profit. You typically must pay transaction costs, such as brokerage fees, when executing an equity transaction. These reduce your percentage gain and profit. You can calculate the percentage gain on your equity investments to measure their performance.

1. Determine from your records the price you paid for an equity investment, the price for which you sold the investment, the amount of dividends or distributions you received from the investment and any transaction costs you paid. For example, assume you paid \$5,000 for an equity investment, sold it for \$6,000, received \$100 in dividends and paid \$50 in transaction costs.

2. Add together the dividends you received and the investment’s sale price. In this example, add together \$100 in dividends and the \$6,000 sale price to get \$6,100.

3. Subtract the transaction costs from your result. In this example, subtract \$50 in transaction costs from \$6,100 to get \$6,050.

4. Divide your result by the equity investment’s purchase price. In this example, divide \$6,050 by the \$5,000 purchase price to get 1.21.

5. Subtract 1 from your result. Multiply this result by 100 to calculate the gain on the equity transaction as a percentage. A positive result represents a gain on the transaction. A negative result represents a loss, which means you lost money. Concluding the example, subtract 1 from 1.21 to get 0.21. Multiply 0.21 by 100 to get a 21 percent gain on the equity transaction.