The Analyst's Path

Glossary

Compound annual growth rate

M0.03 · M2.05

Also called CAGR, compound annual growth rate.

The single constant growth rate that would take a starting value to an ending value over a given number of years.

Revenue that went from ₹2,400 crore to ₹4,800 crore in five years compounded at 14.87%.

The measure hides everything between the endpoints, which is its convenience and its danger. A company that grew 40% in year one and stagnated for four years reports the same figure as one that grew steadily, and the two are not the same investment.

Always show the path beside the rate.