How to Calculate Revenue Growth

Calculating revenue growth

There are two primary schools of thought regarding investment analysis. They are fundamental and technical analysis. Technical analysis is the study of historical changes in price and volume data, and 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 good the company is at bringing in sales.

Instructions

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 10K. 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.

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.

3. Subtract Year 1 revenue from Year X revenue (in this case Year 2 revenue). The answer is $130,000 - $100,000 = $30,000. This is the revenue growth from Year 1 to Year 2.

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

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

References

• Investopedia: Quarterly Revenue Growth