Calculate compound annual growth rate
CAGR = ((Ending Value ÷ Beginning Value)^(1/Years) - 1) × 100. If revenue grew from ₹10 lakh to ₹20 lakh in 5 years: ((20/10)^(1/5) - 1) × 100 = 14.87% CAGR.
CAGR smooths volatility and shows true compound growth. A company growing 100% then -50% has 0% CAGR (back to start), not 25% average. CAGR reflects actual end result.
Good CAGR varies by industry and stage. Startups might target 50-100%+, mature companies 5-15%. Compare against industry benchmarks. Consistent 15-25% CAGR over years indicates strong performance.
Yes, if the ending value is less than beginning value. If revenue dropped from ₹20 lakh to ₹10 lakh over 5 years, CAGR = ((10/20)^(1/5) - 1) × 100 = -12.94%.
CAGR hides year-to-year volatility, assumes steady growth, and doesn't account for risk. A company with steady 10% CAGR is more predictable than one with volatile 10% CAGR.
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