As a business owner, you’re always looking for ways to grow your company. And one of the most important indicators of growth is the growth rate. But how to find growth rate formula for your business can be challenging? In this ultimate guide, we’ll show you how to find growth rate of your company using our easy-to-follow formula.

## What is the Growth Rate Formula?

The growth rate of any variable is the rate at which its value changes over a certain time period. Some of the most common examples of variables with rates ofgrowth are revenue, dividends, profits, and so on.

The growth-rate equation is used to calculate how much something has grown or shrunk. The rate is calculated by subtracting the initial value from the final value and dividing the difference by the original number. To calculate a growth rate of 50%, for example, you would take 50% of the difference between 10 and 20, which is 10. Then, you divide 10 by 10, which equals 1. The formula for calculating the percent change is: Percent Change = (New Number – Old Number) / Old Number

### Examples of Growth Rate Formula (With Excel Template)

Let’s use an example of calculating growth rate to better understand it.

#### Growth Rate Formula – Example #1

If you had invested in a stock exactly one year ago for $1,500, your investment value would currently be worth $1,800. This represents a growth rate of 20%.

Calculate the rate of growth of the interest rate based on the information provided.

The solution:

The growth rate of a company can be calculated using the following equation.

The growth rate is the difference between the final value (the total number of sales) and the initial (the starting).

To calculate the growth rate, simply take the difference between the current value and the original value, then divide that number by the original value. In this case, we would take ($1,800 – $1,500) to get $300, and then divide that by $1,500 to get 0.2. Multiply that number by 100 to get 20%, which is our final answer.

The return on investment increased by 20% in the last year.

#### Growth Rate Formula – Example #2

Apple, Inc., is a great example of how a company’s growth can fluctuate from year to year. By looking at the firm’s past two years of financial statements, we can see that its revenue, earnings and dividends have all grown at different rates.

Question: Does the same growth rate from net sales carry over to dividend per share?

Solution:

The growth rate can be calculated using the equation below.

Growth Rate = (2017 Final Value – 2017 Initial Value) 2017 Initial Value

For 2017

Total sales

The company’s net sales grew by 6.30% last year.

Net income

The company’s net income grew by 5.83%.

Earnings per Common share

The dividend per share for the company has seen a growth rate of 10.09%. This is calculated by taking the current dividend per share ($2.40) and subtracting the previous dividend per share ($2.18). This difference is then divided by the previous dividend per share ($2.18), which gives the growth rate percentage.

For 2018

Total sales

The company’s net sales have grown by 15.86%.

Net income

The company’s net income grew by 23.12% last year.

Earnings per Common share

The dividend per share for the company has grown by 13.33%. This is a good sign for the company, as it indicates that they are making more money and can afford to pay out more to shareholders. This growth rate is sustainable in the long term, so investors can expect to see their dividends increase over time.

Although sales growth, earnings growth, and dividends per share are all growing, the rates ofgrowth differ. This could mean that one measure is growing faster than another, or it could mean that all three are growing at a similar rate.

This means that in 2017, the dividends that the company paid out were growing faster than its sales growth rate, while in 2018, its sales were increasing slightly faster that its payouts.

### Explanation

The formula for calculating your growth percentage is:

First, you’ll want establish the baseline value of your key performance indicator. For example, you can use the previous year’s revenue from your income statement.

Next, to determine the final value of the metric, we will use revenue from the income statement of the current year.

Step 3: To calculate the change in value, simply deduct the initial value from the final value.

The change in value equals the final value of the investment minus the initial cost.

The final step is to divide the change in the value (from step 3) by the starting value of the metric (from step 1) and then multiply by 100 to express the result in percent.

The growth rate equals the final value minus the initial value divided by the initial value.

### Relevance and Use of Growth Rate Formula

The growth rate formula is a simple way for investors and companies alike to gauge past performance, and project future growth. By understanding this formula, investors can gain insight into how healthy a particular company is, and how well it will perform in the future.

Growth rates are often used by businesses to measure their overall performance.

Investors can look at either their portfolio’s growth in terms of the book value of their holdings or their earnings-per-share.

Analysts often use growth percentages, such as Q-over-Quarter (or Quarter-over-quarter) and Year-Over-Year (or year-over-year), to measure how companies are performing.

## Why is growth rate important?

Why is growth rate important? Growth rate is a key metric for determining the health of a business, investment or population. It helps you make predictions about future growth and can be used to represent the percent change in an overall population from one year to another.

The percent change in the number of new businesses from one year to another The percent change in the value of a company’s stock from one year to another Growth rate is important because it can help you predict future growth. For example, if the population has been growing by 2% per year, you can predict that it will continue to grow at that rate. Growth rate can also be used to compare different investments or businesses.

The percentage change in the total population from 2015 to 2016

The percent change in the overall population from one year to another is 2%.

Growth rate is important because it is a measure of the change in population over time. It can be used to predict future population growth and to compare the growth of different populations.

The performance of the company and its projected growth

Growth rate is important because it is a key metric in determining the performance of a business and its expected future growth. Additionally, the growth rate of other assets and investments can impact the amount of money that can be borrowed.

## Formula to Calculate Growth Rate of a Company

To calculate the growth rate of a company, you will need to subtract thebeginning value of the period from the value at the end of the period. The result will be divided by the value at the beginning of the period.

The most basic type of growth that can be measured is the increase in value of an investment, asset, or portfolio over a given period of time.

CAGR is a method of calculating growth over multiple periods.

of periods) – 1

To calculate your growth, you will need to know the value of the assets at the beginning and end of the period. Then, divide that ending number by the starting number and multiply by 100.

## Conclusion

As a business owner, it’s important to keep track of your company’s growth rate. By doing so, you can see how well your business is performing and make necessary changes if needed. Luckily, how to find growth rate of your company is easy with our formula. So what are you waiting for? Start growing your business today!

#### Growth Rate Formula

As an expert in business and finance, I have a deep understanding of the concept of growth rate and its significance in evaluating the performance and potential of a company. The growth rate is a crucial metric that indicates the percentage change in a variable over a specific period of time, such as revenue, dividends, profits, and more. It is commonly used by businesses and investors to assess past performance and project future growth.

The growth rate formula is straightforward and essential for both investors and companies to gauge performance and potential. It is calculated by finding the difference between the final value and the initial value of a variable, dividing that difference by the original value, and then multiplying by 100 to express the result as a percentage. This formula provides valuable insights into the health and future prospects of a company.

#### Examples of Growth Rate Formula

Let's delve into the practical application of the growth rate formula with a couple of examples:

**Example #1:**
If an individual had invested in a stock for $1,500 a year ago, and the investment is currently worth $1,800, the growth rate can be calculated as follows:

- The change in value: $1,800 - $1,500 = $300
- Growth rate: ($300 / $1,500) * 100 = 20%

This demonstrates how the growth rate formula can be used to assess the performance of an investment over time.

**Example #2:**
Analyzing the growth rates of Apple, Inc. over two years provides valuable insights into the fluctuation of its revenue, earnings, and dividends. By comparing the growth rates of different variables, such as net sales, net income, and dividends per share, it becomes evident that each measure may be growing at different rates. This comparison is crucial for understanding the overall performance and trajectory of the company.

#### Relevance and Use of Growth Rate Formula

The growth rate formula is a fundamental tool for investors and businesses to evaluate past performance and forecast future growth. It is widely used to measure overall performance, assess the health of a company, and make informed investment decisions. Growth rates are essential for comparing different investments or businesses and can be expressed as Q-over-Q (quarter-over-quarter) or YOY (year-over-year) percentages.

#### Importance of Growth Rate

The importance of growth rate lies in its ability to predict future growth and represent the percent change in various aspects, such as the overall population, new businesses, or the value of a company's stock. It serves as a key metric for determining the health of a business, investment, or population, and is crucial for making predictions about future growth.

#### Formula to Calculate Growth Rate of a Company

To calculate the growth rate of a company, the following formula is used:
**Growth Rate = (Final Value - Initial Value) / Initial Value**

This formula provides a simple yet powerful method for assessing the growth of a company over a specific period.

#### Conclusion

In conclusion, understanding and calculating the growth rate of a company is essential for business owners and investors. By leveraging the growth rate formula, they can gain valuable insights into the performance and potential of a company, make informed decisions, and drive sustainable growth.

By providing a comprehensive overview of the growth rate formula and its practical application, I aim to equip business owners and investors with the knowledge and tools necessary to assess and drive the growth of their companies.