KPI Library – Revenue Growth Rate
Revenue Growth Rate
Revenue is the income obtained by a company (cash or cash equivalents) from its activities; the rate that revenue grows in a given period provides the potential for a company to “make money” and indicates how well an organization is achieving its strategic objectives. However, it should be noted that for a company to “make money” it is necessary to compare the outflow of expenses with the inflow of revenue.
Revenue growth is calculated by comparing the current revenue (from a quarter or other time period) to that of the previous equivalent time period.
Revenue from business activities in 2014 = £500, 000. Revenue from business activities in 2015 = £550, 000. To express revenue growth as a currency value (£) (2015-£550,000 – 2014-£500, 000) = + £50,000 revenue growth over 12 months To express revenue growth as a percentage. (£50,000 divided by 500,000) x 100 = + 10% revenue growth over 12 months