Growth rate is a metric that measures the percentage change in a particular variable — such as revenue, earnings, or GDP — over a specific time period. It is a key indicator used by investors to evaluate a company's performance and future potential.
The formula is: Growth Rate = ((New Value - Old Value) / Old Value) × 100. For example, if a company's revenue increased from $1 million to $1.2 million, the growth rate would be 20%.
Investors use growth rates to compare companies, assess industry trends, and make informed investment decisions. A consistently high growth rate often signals a strong, expanding business.