How To Determine The Average Annual Growth Rate

Table of contents:

How To Determine The Average Annual Growth Rate
How To Determine The Average Annual Growth Rate

Video: How To Determine The Average Annual Growth Rate

Video: How To Determine The Average Annual Growth Rate
Video: EC3115: Tutorial 3 - Calculating Average Annual Growth Rates 2024, March
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In mathematical statistics, the concept of growth rate is often used, which characterizes the intensity of the dynamics of a particular phenomenon. To determine it, you need to know the initial, baseline indicator and several intermediate ones, measured at equal intervals. To determine the average annual growth rate, the calendar month should be used as the time interval.

How to determine the average annual growth rate
How to determine the average annual growth rate

Instructions

Step 1

In the particular case, when there are only two values of indicators - baseline (Pb) and current (Pt), the growth rate is determined by the formula: Tr = (Pt / Pb) * 100%. When determining the average annual growth rate, a numerical value is used as a basic indicator, characterizing the phenomenon under study, measured at the end of the previous period, that is, on January 1 of the year for which the average annual growth rate is determined. This value must be expressed in absolute terms.

Step 2

If the growth rate is calculated as a coefficient, then the base indicator is taken as 1 or 100 if it is considered as a percentage. When calculating the baseline growth rate for each month of the year, all indicators at the end of each month are related to the baseline as of January 1. If you will calculate chain indicators, then the indicator of the previous period should be taken as the base one. It is more convenient to use chain indicators to calculate the average annual growth rate.

Step 3

The analyzed period is a calendar year - from January 1 to December 31. You need to have information and values of indicators in absolute terms at the end of each month, together with the base value, their number should be 13. Calculate the chain growth rates for each month. You should have 12 growth rates for each calendar month. These are very important characteristics. If you calculate them for several years and analyze the results, you can see and then account for their seasonal fluctuations.

Step 4

The average annual growth rate (Cgtr) is already free from the influence of seasonality. To determine it, add up all chain indicators for the year and divide them by 12: Crtr = (Tr1 + Tr2 + Tr3 +… + Tr11 + Tr12) / 12.

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