REVENUE GROWTH
What revenue growth shows
Revenue growth measures how much revenue changed between two equal periods.
FORMULA
Revenue growth formula
Take earlier revenue away from later revenue. Divide the difference by earlier revenue and multiply by 100.
EXAMPLE
Revenue rises from $100,000 to $120,000
The dollar change is $20,000. Dividing $20,000 by $100,000 gives a 20% growth rate.
- Earlier revenue
- $100,000
- Change
- $20,000
- Growth rate
- 20%
COMPARE LIKE WITH LIKE
Use the same type of period.
Compare month to month, quarter to quarter, or year to year. For several periods, compound growth gives an average rate per period.
Month over monthOne month against the previous month
Year over yearA period against the same period last year
Compound growthAverage rate across several periods
QUESTIONS
Revenue growth questions
How do you calculate revenue growth?
Subtract earlier revenue from later revenue. Divide the change by earlier revenue, then multiply by 100.
What does a 20% revenue growth rate mean?
It means later revenue is 20% higher than earlier revenue. Revenue rising from $100,000 to $120,000 is 20% growth.
Can revenue growth be negative?
Yes. If later revenue is lower than earlier revenue, the result is negative. That shows a decline in revenue.
What is compound revenue growth?
Compound growth is the average rate per period that turns the earlier revenue into the later revenue over several periods.
Should I compare months, quarters, or years?
Compare periods with the same length. Use month to month, quarter to quarter, or year to year so seasonality does not distort the result.