Growth Rate

growth rate

The annual rate at which a variable, such as gross domestic product or a firm's earnings, has been or is expected to grow. One common method of estimating future growth rate is simply to measure a variable's past growth rate and then project a continuation of the trend.

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Growth Rate

The percentage of increase a variable has gained within a certain period of time. Generally, growth rate means year-on-year increase in income, earnings, dividends, or something similar. A positive, steady growth rate is a sign of a company's health, while a sudden spike in growth rate can (but does not always) mean unsustainable growth. A faster growth rate can mean that a new company or technology is popular with investors and/or consumers, while more established companies are generally expected to have a slower growth rate. Tracking a company's growth rate is an analytical tool often used in estimating future performance.

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Growth rate. A growth rate measures the percentage increase in the value of a variety of markets, companies, or operations.

For example, a stock research firm typically tracks the rate at which a company's sales and earnings have grown as one of the factors in evaluating whether to recommend that investors purchase, hold, or sell its shares.

Similarly, the rate at which the gross domestic product grows is a measure of the strength of the US economy.

If you want to compare the vigor of entities or elements of different sizes, it's more accurate to look at growth rate than it is to look at the actual numerical change in value. For example, an emerging market might be growing at a much faster rate than a developed one even though the size of those economies is vastly different.