How does inc 500 calculate growth

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Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Updated: Oct 20, at PM. Join Stock Advisor Discounted offers are only available to new members. Subtract the current total revenue from this figure to calculate how much of that figure is growth.

Taylor embarked on a professional writing career in and frequently writes about technology, science, business, finance, martial arts and the great outdoors. He received a Master of Science degree in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences at College of Charleston. He also holds minors in statistics, physics and visual arts. Share It. Many investors seek companies that can improve their sales at above-average rates, which is why it's useful to know how to calculate revenue growth from one year to the next.

Determining the growth rate over a one-year period is straightforward; you simply take the sales difference, divide it by the starting revenue total, and multiply the result by The math is slightly more complicated for a three-year period, but below we'll outline the entire calculation. But how much did it grow per year? Calculating three-year growth There are three steps involved in calculating growth for a three-year period they're actually the same for any period that's greater than one year.

First, take the ending sales figure and divide it by the beginning sales figure. Next, using the exponent function on your calculator or in Excel, raise that figure 1. Finally, subtract 1 from that answer and multiply the result by to find the revenue growth: 1. What we just determined is the compound annual growth rate, or the rate that best expresses the straight line path of sales over a given time period. Put another way, we've calculated that this company's sales grew at an annual rate of Confirming the result We can verify that math simply by plugging in our calculated growth rate over the three-year period described in the table above:.

That's it. Keep in mind that you can adjust this calculation to fit any time period that you'd like to measure simply by changing the denominator in the power function.