What is a revenue growth formula?

The revenue growth formula, also known as the revenue growth rate, calculates your annual growth. It compares the revenue from the previous period with the current period. Each period needs to be equal in length. For example, this month versus the last, or this year versus the previous. You shouldn’t calculate this month’s revenue with last year’s.

How does revenue growth rate work?

For example, if the company’s revenue doubles from $1 million to $2 million, it has experienced 2% revenue growth. If this company had started with $500,000 it would have seen 5% revenue growth. Revenue growth rate calculates annual growth by comparing the previous period's revenue with the current period's revenue.

Does revenue growth drive value creation?

Some research shows that revenue growth among large global companies drives both value creation and higher returns to shareholders. Revenue growth is a quick and easy way to gauge a company's ability to increase revenue over a given period.

Should revenue growth be a reactive strategy?

Regardless of the industry your company serves, it’s crucial to analyze your sources of revenue, make predictions for upcoming months, and initiate new strategies to increase revenue. As mentioned above, revenue growth shouldn’t be a reactive strategy implemented whenever you sense danger.