How to determine the average growth rate

The term "growth rate" is used in industry, economics, and finance. This is a statistical value that allows you to analyze the dynamics of ongoing processes, the speed and intensity of the development of a phenomenon. To determine the growth rate, it is necessary to compare the values ​​obtained at certain intervals.

Instruction manual

1

Determine the period of time for which you need to calculate the average growth rate. Typically, a calendar year or a multiple thereof is taken for such a period. This allows you to eliminate the influence of such a factor as seasonality, due to changing climatic conditions. In the case when the study period is equal to a year, the average annual growth rate is indicated.

2

Growth rate is a relative concept. It characterizes the change in indicators relative to some initial value. For the average annual growth rate, this initial value will be the indicators obtained on January 1 - the beginning of the year (Po). Decide for yourself which indicators you will take into account, they are chain and basic. Chain characterize the intensity of changes in indicators between two adjacent periods or dates. The baseline shows changes in each period in relation to the baseline, for which, usually, the initial value is taken.

3

Determine the absolute values ​​of those indicators for which you need to calculate the average growth rate. In this case, if the study period is a year, determine 12 values ​​obtained on the last date of each month (Pi).

4

Determine the absolute growth rate for each month (APi). If you use basic indicators, then APi = Po - Pi. To determine the average annual growth, add all 12 monthly values ​​of the growth rate and divide the amount by 12. This will be the average growth of indicators (P) for the year.

5

The average basic growth rate (Kb) for the year is equal to Kb = P / Po, express this indicator as a percentage and you will determine the average growth rate for the desired period (TRsg): TRsg = Kb * 100%.

Useful advice

Growth rate - a percentage indicator of dynamic changes. If these changes are expressed by a simple ratio, then the quotient will be called the growth coefficient.