Decompose a year over year change in returns

[droidhunter]

Hello,
I'm working on decomposing a change in returns from one period to another period.

In 2018, my return is calculated as $20 income divided by $100 in capital (20% return).
In 2019, my return is calculated as $50 income divided by $200 in capital (25% return).

Is there a way to decompose the 5% return into something like: 8% is from a change in income, and -3% from an increase in capital?

Thanks so much for any advice.

 

[JeffM]

Assuming you have $100 at the beginning of 2018 and earn 20% on it, you will have 20 + 100 = 120 at the start of 2019. Further assuming that you earn 25% in 2019, you have will have 120 + 30 = 150 at the end of 2019. On average, you will have earned approximately 22.474487% over the two years, which makes intuitive sense because the average return should be between 20 and 25.

Where in the world do you get 5%. And how did 120 magically become 200? If you go from 100 to 150 in two years, why do you think something is negative? Your question makes no sense whatsoever.

 

[lev888]

Where does 5% return come from?
What change in income are you referring to? As I understand you have an investment that increased by 20% and 25% - that's the only income in the picture.