1. Growth Rates

Hi, I need to measure uptake / success of a program. This success is being evaluated based on transaction volumes.

Here's what I am thinking in terms of an approach. I'm not sure it's a good way to go. And I don't know for sure how to do the necessary calculations:

I have monthly transaction volume data from January 2011 to December 2011, inclusive. I am trying to figure out:

The annual growth rate
The monthly growth rate

I want the monthly growth rate because it (and the 2011 data) will be used as a baseline. The baseline will then be used to predict the volumes in 2012 and onward. The difference between the predicted volumes (based on the historical growth rate) and actual volumes will be the uptake and help evaluate effectiveness of a program.

I've found several sites on the web that provide answers but I don't feel confident in them. I don't think I want compound growth rate. Is that the same as Constant Growth Rate?

P.S. I also need the formula in a format that i can use with Excel.

Thank you!!

2. Re: Growth Rates

The formula to use for growth rate is change in volume divided by initial volume:

$\frac {V_2-V_1}{V_1}$

So the growth rate for a month would be: the volume for that month minus the volume for previous month divided by volume of the previous month. For example if cell A1 = volume for March and cell A2 = volume for April, then the April growth is (cellA2-cellA1)/cell A1. Similarly the growth rate for a year would be the volume for the year minus the volume for the previous year divided by the volume of previous year. You may want to convert these to a percentage.

3. Re: Growth Rates

thank you. The above formula will result in a different growth rate for each month. How can I find one number that would be applied to forecast the future? or would I have to apply the growth for a given month this year to the same month in 2012? Or do I use the annual growth rate and divide it by 12 to get one number for a forecast?

4. Re: Growth Rates

If you want to calculate an average monthly growth rate for n months you can use this formula:

$V_1(1+ R) ^{n} = V_{1+n}$

This can be rearranged to give:

$R = e^{\frac {\ln ( \frac {V_{1+n}}{V_1} )}n}-1$

For example if the monthly volume for January of year 1 is 1000 units, and the volume for December of year 1 is 1500 unites, the average monthly growth over the 11 months is:

$R = e^{\frac {\ln (\frac {1500}{1000})}{11}} - 1= e^{0.369} -1 = 0.0375$

or 3.75% per month.

5. Re: Growth Rates

do you happen to know how this formula for the average monthly growth rate can be done using excel?

6. Re: Growth Rates

Sure. If V1 is in cell A1, V_(1+n) is in cell A2, and the value for N is in cell A3, then:

R=exp(ln(A2/A1)/A3)-1

7. Re: Growth Rates

ugggh.
Unfortunately I only have basic skills in excel so the formula you've provided is almost lost on me...so:

My January 2011 value is 4712
My December 2011 value is 6505

Using your formula, would it look like this?

=exp(ln(6505/4712)/11)-1 = 0.0297 (or 3%)

8. Re: Growth Rates

Originally Posted by galinthefrontrow
ugggh.
Using your formula, would it look like this?

=exp(ln(6505/4712)/11)-1 = 0.0297 (or 3%)
Yes! This means that the average monthly growth was 2.97%. Hence the expected volumes each month is 2.97% greater than the month before:

Jan: 4712
Feb: 4852
Mar: 4997
Apr: 5156
May: 5298
Jun: 5456
Jul: 5618
Aug: 5785
Sep: 5957
Oct: 6136
Nov: 6317
Dec: 6505

9. Re: Growth Rates

Yaayy!! Thank you sooo much for your help!