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growth rate formula
Message posted by david (via 134.114.40.201) on August 3, 2001 at 6:23 PM (ET)
I found the following formula for calucalting rate of growth. Can someone please varify that this formula is correct? If it is correct, using x2= 97 and x1= 5. I get a growth rate of 1,840%. What does this mean?
1) Find the data for the time period of interest.
2) Call the first period's data x1 and the second periods's data x2.
3) The growth rate is then calculated as (x2 - x1) / x1.
To express the growth rate as a percentage, multiply your answer in 3 by 100.
READERS RESPOND:
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Re: growth rate formula
Message posted by JG (via 128.8.22.17) on August 4, 2001 at 5:31 AM (ET)
Your computations are correct but in this case meaningless. This type of calculation usually assumes that x1 and x2 are approximately the same.
Re: growth rate formula
Message posted by akhmad bayhaqi (via 203.130.231.187) on August 27, 2001 at 4:48 AM (ET)
Yes I agree with you. If I'm not mistaken, a 'good' growth rate should not exceed 100%. Do you have any formula that could yield this kind of result?
Re: growth rate formula
Message posted by Tomi (via 154.32.143.46) on September 3, 2001 at 3:57 AM (ET)
One thing you haven't made clear is the time scale. If your values x1 and x2 are separated by a long period of time (say 20 years), then the growth rate per year will be much smaller than the 1840% you have calculated. An approximation would be to divide 1840% by 20, but you can be more accurate by using logarithms.Another important question is the accuracy of your measurements. Are x1 and x2 single observations or the means of a number of observations?
If you have a set of values x1, x2, x3, x4, ... then the best way to estimate the growth rate (assumed constant) is to plot the points, fit an exponential curve (or take logs and fit a straight line) and get the growth rate from the equation of the curve. This can eliminate random fluctuations.
Re: growth rate formula
Message posted by Tomi Owens (via 154.32.143.126) on September 3, 2001 at 9:15 AM (ET)
There is no such thing as an all-purpose "good growth rate" - it all depends on what you are measuring and over what time scale.A good growth rate for a savings account might be 7% per year. A good growth rate for a foetus at 24 weeks would be 50% per month.
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