How to Calculate Growth Rate of Output

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Doing a business calculation.
Doing a business calculation. (Image: sirastock/iStock/Getty Images)

Growth rate of output displays how a firm's or economy's outputs change on a year-to-year basis. The output could represent anything such as widgets a company manufactures, total output of an economy or total services performed. The growth rate shows if a company or economy is growing or declining. In addition to outputs, investors can use growth rate to determine how an investment is performing from year to year by comparing an investment's return each year.

Determine the output to analyze, then subtract the prior year's output from the current year's output. For example, Country A had a total output worth $1,000,000 in 2008. In 2009, Country A had a total output worth $800,000, so $800,000 minus $1,000,000 equals a negative $200,000.

Divide the prior year's output by the difference of the current year and the prior year's output. In the example, negative $200,000 divided by $1,000,000 equals negative 0.2.

Multiply the number calculated in Step 2 by 100 percent. In the example, negative 0.2 times 100 percent equals a growth rate of negative 20 percent.

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