How to Calculate Growth Rate in Excel Formula

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Excel Growth Rate Calculator

Calculation Results:

Simple Growth Rate: 0%

CAGR (Annualized): 0%

Excel Formulas for these values:

How to Calculate Growth Rate in Excel

Understanding how to calculate growth rates in Excel is a fundamental skill for finance, marketing, and data analysis. Whether you are tracking revenue growth, user acquisition, or investment returns, the mathematical logic remains consistent.

1. The Basic Growth Rate Formula

To find the percentage increase or decrease between two numbers in Excel, you use the basic "New minus Old divided by Old" formula:

=(Ending_Value – Starting_Value) / Starting_Value

In practice, if your starting value is in cell A2 and your ending value is in cell B2, the formula is =(B2-A2)/A2. Make sure to format the cell as a "Percentage" to see the correct decimal shift.

2. Calculating Compound Annual Growth Rate (CAGR)

When you want to see the average growth over multiple periods (like 5 years), the simple formula isn't enough because it doesn't account for compounding. The Excel formula for CAGR is:

=(Ending_Value / Starting_Value)^(1 / Periods) – 1

Alternatively, you can use the built-in RRI function: =RRI(periods, start_value, end_value).

Real-World Example

  • Starting Value: 50,000 (Revenue in Year 1)
  • Ending Value: 85,000 (Revenue in Year 4)
  • Periods: 3 (Years elapsed)
  • Calculation: ((85,000 / 50,000)^(1/3)) – 1 = 19.35% CAGR

Quick Tips for Excel Accuracy

  • Order of Operations: Always use parentheses around (Ending - Starting) to ensure the subtraction happens before the division.
  • Zero Errors: If your starting value is zero, Excel will return a #DIV/0! error. Use IFERROR to handle these cases.
  • Formatting: Select your result cell and press Ctrl + Shift + % to quickly format the number as a percentage.
function calculateGrowthRate() { var start = parseFloat(document.getElementById('startValue').value); var end = parseFloat(document.getElementById('endValue').value); var periods = parseFloat(document.getElementById('periods').value); var resultArea = document.getElementById('growthResultArea'); var simpleResult = document.getElementById('simpleRateResult'); var cagrResult = document.getElementById('cagrResult'); var simpleExcel = document.getElementById('excelSimpleFormula'); var cagrExcel = document.getElementById('excelCAGRFormula'); if (isNaN(start) || isNaN(end) || start === 0) { alert("Please enter valid numbers. Starting value cannot be zero."); return; } if (isNaN(periods) || periods <= 0) { periods = 1; } // Simple Growth Rate Calculation var simpleGrowth = ((end – start) / start) * 100; // CAGR Calculation // Formula: ((End/Start)^(1/n)) – 1 var cagr = (Math.pow((end / start), (1 / periods)) – 1) * 100; // Update UI simpleResult.innerText = simpleGrowth.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); cagrResult.innerText = cagr.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); // Update Excel snippets simpleExcel.innerText = "Simple Formula: =(" + end + " – " + start + ") / " + start; cagrExcel.innerText = "CAGR Formula: =(" + end + " / " + start + ")^(1 / " + periods + ") – 1"; resultArea.style.display = 'block'; }

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