Growth Rate Calculator
Understanding Growth Rate
The growth rate is a fundamental concept used across various fields, including finance, economics, biology, and technology. It measures the percentage change of a value over a specific period. A positive growth rate indicates an increase, while a negative growth rate signifies a decrease.
The formula for calculating the average growth rate over a period is derived from comparing the final value to the initial value. If we have an initial value (V_initial), a final value (V_final), and a time period (T), the growth rate can be determined.
A simple way to express the growth rate is the total change divided by the initial value, then scaled to represent a period. For an average rate per period, the formula is:
Growth Rate = &frac;(V_final – V_initial)}{V_initial} × 100% per time period
This calculator helps you determine this rate quickly. For instance, if a company's revenue grew from $100,000 to $120,000 over 1 year, the growth rate is:
Growth Rate = &frac;($120,000 – $100,000)}{$100,000} × 100% = 20% per year.
If the time period is different from one unit (e.g., multiple years, months, or days), this formula gives the overall growth rate for that entire duration. For applications requiring a compounded annual growth rate (CAGR), a slightly different formula is used:
CAGR = ( ( V_final / V_initial)(1/T) – 1) × 100%
This calculator uses the simpler average growth rate formula. Ensure your time period is consistently measured (e.g., years, months, days) and that the initial and final values correspond to the start and end of that exact period.