How can I use the growth rate formula in Microsoft Excel?
I have been assigned the task of analyzing the sales data for a company of several years. In this project, I need to calculate the annual growth rate. Explain to me how can I use the growth formula in Microsoft Excel to determine the growth percentage (yearly) between two back-to-back years.
If you want to use the growth formula in Excel for your analytics project database, then you can follow the following points:-
The formula for finding the growth rate between two consecutive years is
= GROWTH ( known_y’s, [ known_x’s], [new_x], [const])For applying the above formula, you can consider a scenario where you have the sales data in cells B2 to B5 for four consecutive years from 2019 to 2022. For calculating the annual growth rate by using the above Excel formula you can use:-
= GROWTH(B2:B5)The above Excel formula will provide you answer in terms of growth rate based on the provided sales data.
Keep in remember that interpreting the result involves the understanding that the growth rate refers to the percentage increase between consecutive periods chosen by you. For example, a growth rate of 0.005 refers to a 5 percentage (5%) increase yearly.