Q&A for How to Calculate Growth Rate

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What if the past value is 0?

Anna Entrambasaguas

Community Answer

Then it isn't really growth rate, but your first profit/loss. You will use this value to calculate your growth rate next year (or other time period).

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Question

How do I calculate revenue growth rate over previous year?

Donagan

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Subtract the previous year's revenue from the current year's revenue, then divide the difference by the previous year's revenue.

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Question

How do you calculate growth rate when the initial value is negative?

Community Answer

Add past value and present value, and divide by past value without changing their signs.

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Question

Is this referring to year-on-year compound growth?

Community Answer

Yes, it is. For example, based on the table given in the section, the value has changed from 205 in 2009 to 310 in 2008. The annualized growth rate (year-on-year) is 4.22% and the overall growth rate is 51.22%.

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Question

How do I calculate the terminal value using the growth rate?

Anna Entrambasaguas

Community Answer

For example, if a company made 100 euro in 2015 and for 2016 you only get information that their profit was 18% higher year on year, just take the original past value (100) and calculate 118%. So in this simple example, the company's profit in 2016 was 118 euro. Essentially, the first past value is your 100% and from there you can calculate any value.

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Question

How do I get the growth rate when the past figure is 0?

Donagan

Top Answerer

The growth rate would be infinity, which is meaningless for practical purposes. It's better to wait until you have a non-zero past figure to work with. If you can't wait, you could choose some very small, invented number to use for a past figure.

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Question

How do I use a formula to calculate growth rate?

Community Answer

y=a(1+r)^x. Plug in numbers for a -which is your constant or starting number, r -the rate at which it increases and x -which is the time or intervals that it increases. Then solve.

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Is "growth rate" the same as "specific growth rate?"

Community Answer

Not the same at specific growth rate because many specific growth rate equations have been proposed in the literature, but only a few are currently used.

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What would $60 dollars a month be worth in 10 years at an average growth rate?

Community Answer

This culculates what a $60 dollars investment will be wroth in the future, given the original investment annual additions.

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Question

How do I calculate growth rates per annual percentage?

Community Answer

Enter the growth rate over one year, subtract the starting value from the final value, then divide by the starting value. Multiple this result by 100 to get your growth rate displayed as a percentage.

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How do I calculate annual growth rate using the financial information from previous years of business?

Community Answer

These numbers can all be found in the company's income statement reported quarterly and annually. Next, divide that difference by the revenue number from the period. Multiply that by 100, and you'll have the percentage growth rate of total revenue between the two periods.

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