Growth
Growth per period, compounded
Take the growth multiple, raise it to one over the number of periods to spread it evenly, then subtract one. This is the figure to quote when comparing spans of different length.
The Formula
g = (End / Start)^(1/n) - 1
Take the growth multiple, raise it to one over the number of periods to spread it evenly, then subtract one. This is the figure to quote when comparing spans of different length.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| End / Start | Growth multiple | dimensionless | 1.25 for a 25% rise. Below 1 whenever revenue fell. |
| n | Number of growth steps between the endpoints | periods | Four annual reports hold three steps. Fractions are allowed: 18 months is 1.5 periods. |
| g | Growth per period | decimal | 7.7217% for a multiple of 1.25 spread over three periods. Negative when the multiple is below 1. |
What Each Symbol Means
End / Startdimensionless
Growth multiple
1.25 for a 25% rise. Below 1 whenever revenue fell.
nperiods
Number of growth steps between the endpoints
Four annual reports hold three steps. Fractions are allowed: 18 months is 1.5 periods.
gdecimal
Growth per period
7.7217% for a multiple of 1.25 spread over three periods. Negative when the multiple is below 1.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate revenue growth rate page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Revenue Growth Rate, filed under Business. Every number the guide produces comes from substituting into this one line.