## Compound Annual Growth Rate (CAGR)

The **compound annual growth rate (CAGR)** is the annualized average rate of revenue growth between two given years, assuming growth takes place at an exponentially compounded rate. The CAGR between given years X and Z, where Z – X = N, is the number of years between the two given years, is calculated as follows:

*CAGR, year X to year Z = [(value in year Z/value in year X) ^ (1/N)-1]*

For example, the CAGR for 2006 to 2011 is calculated as:

*CAGR, 2006 to 2011 (X = 2006, Z = 2011, N = 5) = [(value in 2011/value in 2006) ^ (1/5)-1]*