How to Calculate Revenue Growth

Calculating revenue growth is a fairly easy task.
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There are two primary ways investments are analyzed: fundamental and technical analysis. Technical analysis involves the study of historical changes in price and volume data, whereas fundamental analysis looks at the intrinsic value of a company compared to the market value. Revenue growth is a measure used by fundamental analysts to see how well the company is bringing in sales.


Step 1

Obtain the income statement for the company for which you would like to calculate revenue growth. You can find this in the annual report or the 10-K. Both of these documents are mandatory for public companies and you can usually find them on the investor relations section of the company website. If not, contact the company directly to request a copy or download from your favorite investment research site.


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Step 2

Determine Year 1 and Year X revenue. Year 1 revenue is the beginning revenue, and Year X is the revenue amount for the ending year. Let's say you want to find the revenue growth from Year 1 to Year 2. Let's also say that revenue in Year 1 is $100,000, and revenue in Year 2 is $130,000.


Step 3

Subtract Year 1 revenue from Year X revenue, which in this case is Year 2 revenue. The answer is $130,000 - $100,000 = $30,000. This represents the revenue growth from Year 1 to Year 2, which then must be calculated as a percentage.


Step 4

Divide the difference by Year 1 revenue. For instance, in our example the equation would be: $30,000 / $100,000 or 0.3.

Step 5

Multiply the answer in Step 4 by 100 for the revenue growth percentage.



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