Content

• Steps
• Advice

To many readers, "calculating growth" sounds like a dreadful mathematical process. In fact, it can be surprisingly simple. The underlying growth rate is simply expressed as the difference between two values ​​over time in relation to the percentage of the first value.Here's a simple guide to this basic calculation with information on more complex growth metrics.

Steps

Part 1 of 2: Calculate basic growth rate

1. 

   Data collection shows quantitative change over time. You only need two numbers to calculate the basic growth rate - the number representing the beginning of a given quantity and the number representing its end value. For example, if the enterprise's value was 20 million VND at the beginning of the month and until now, its value was 24 million VND, we would calculate the growth rate with the head (or "past") value equal to 20 million VND. and the final (or "present") value is 24 million. Let's do a simple example problem. In this case, we would use 205 (past value) and 310 (present value).
   • If these two are equal, there is no growth - the growth rate is zero.

2. 

   
   
   Apply a growth rate formula. All we have to do is replace the present and past values ​​in the following formula: (Present) - (Past) / (Past). The fraction you get is your answer - divide it up to get the decimal value.
   • For our example problem, we will replace 310 for present value and 205 for past value. The formula becomes: (310 - 205)/205 = 105/205 = 0,51

3. 

   
   
   Express your decimal answer as a percentage. Most growth rates are written as percentages. To convert your decimal answer to a percentage, simply multiply it by 100 and add the percentage sign ("%"). A percentage is an easy to understand and widely understood expression of the change between two numbers.
   • So, for our example problem, we will multiply 0.51 by 100 and add the percentage sign 0.51 x 100 = 51%.
   • That means my growth rate is 51%. In other words, the present value is 51% greater than the past value. If the present value is less than the past value, the growth rate will minus.
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Part 2 of 2: Calculate the average growth rate over regular intervals

1. 

   
   
   Sort the data into a table. Although not absolutely necessary, it is useful because it allows you to visualize the given data as a time series of values. Often times simple data tables are enough for our purposes - you just need to use two columns, list the time values ​​in the left column and the corresponding quantity values ​​in the right column, and so on. picture above.

2. 

   Use the growth rate equation to take into account the number of time periods in the data. Your data will have regular time values ​​corresponding to the quantity values. The unit of time doesn't matter - this method can be used for data collected in minutes, seconds, days, etc. In our case, the data is represented by year. Replace the present and past values ​​with the new formula: (present) = (past) * (1 + growth rate) Inside n = number of time periods.
   • This method gives us the average growth rate of each time period given the current and future parameters and assumes steady growth rate. Because for example using time in years, we get an average growth rate annual.

3. 

   Separate the variable "growth rate". Using algebra, transform the equation to bring yourself the "growth rate" to one side of the equal sign. To do this, we divide the two sides by the past parameter, calculate the power 1 / n and then subtract 1.
   • If you do it well, you will get: Growth rate = (present / past) - 1.

4. 

   Solve for the growth rate. Substitute past and present values, as well as n values ​​(the number of periods in the data, including your past and present values) into the formula. Solve based on basic algebraic principles, the order in which the calculation is performed, etc.
   • For the example problem, we will use present 310 and past 205 for n. In this case, the average annual growth rate is simply (310/205) - 1 = 0,0422
   • 0.0422 x 100 = 4.22%. On average, our values ​​have grown 4.22 percent annually.
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Advice

• This method is applicable in both cases. You can use the above formula whether the number goes up or down. In the event of a downturn, that would be a negative growth.
• The complete formula is written like this: ((Present - Past) / Past) * 100