Growth
Compound Annual Growth Rate (CAGR) Calculator
Calculate the compound annual growth rate between any two values over time. Useful for measuring business growth, investment returns, and market expansion rates.
How the Formula Works
CAGR = (Ending Value ÷ Beginning Value)^(1/Years) - 1. This formula smooths out year-to-year volatility to show the consistent annual rate that would produce the same total growth. It's the standard way to express growth rates for any time series.
When to Use This Calculator
Use CAGR to compare growth rates across different time periods, evaluate whether a company is accelerating or decelerating, benchmark against competitors, and set growth targets. It's the language of boardrooms and investor presentations.
Frequently Asked Questions
What is a good CAGR for a company?
It depends on stage and industry. Early-stage startups may grow at 100%+ CAGR. Mature public companies growing at 15-25% CAGR are considered high-growth. The S&P 500 has historically delivered approximately 10% CAGR including dividends. GDP grows at roughly 2-3% CAGR. Any company growing faster than its industry average is gaining market share.
Why is CAGR better than average growth rate?
Simple average growth rate can be misleading because it doesn't account for compounding. A company that grows 100% in year 1 and declines 50% in year 2 has a simple average growth rate of 25%, but is actually back where it started (CAGR = 0%). CAGR reflects the actual compound return and is always more accurate for multi-year comparisons.