CAGR FORMULA EXCEL HOW TO
CAGR FORMULA EXCEL FREE

With the custom function, growth rates behave as you would expect based on common sense - growth rates are positive if values increase over time and negative if they decrease. If negative values are involved, the custom function calculates growth rates that are proportionate to the percentage change from start value to end value (see plots at the bottom of this article for illustration). The custom Excel function is identical to the default CAGR formula for positive start and end values. This morning I decided to investigate this issue in more detail and created a custom function for Excel for calculating growth rates regardless of whether values are negative or positive. For example, there could be difficulties for growth from negative to positive values or when calculating the adjusted CAGR for an even number of years such as 2 years. I tested the recommended adjusted CAGR formula and the updates suggested in the comments, but while these are definitely all improvements, unfortunately no formula appeared to work in all scenarios.

CAGR FORMULA EXCEL HOW TO

One article widely shared on investment websites suggests tweaks to the CAGR formula to handle negative values, you can find the article here: How to handle Percent Change and CAGR for negative numbers. Also, if a negative net income becomes less negative over time (arguably a good sign), CAGR will show a negative growth rate - i.e., if fundamentals get better, growth rates could be reported to be worse. Well-known indicators such as CAGR won't work well - if a negative net income turns positive or vice-versa, CAGR will not compute. When building financial models, one issue I ran into was how to compare company financial data over time. I am not affiliated to Buffet Books or Wisesheets, but I like to see good services succeed, as in this way they stay on the market and we can all benefit from them. The Excel plugin is very useful for swiftly updating financial models and they are building a google sheets add-on as well. I have been involved in beta testing their services and they have great improvements lined up. In case you want access to financial data but you don't work in finance and prefer not to break the bank, have a look at.

CAGR FORMULA EXCEL FREE

If you are interested in this topic, I recommend as a starting point, feel free to give it a try. Recently I got interested in value investing, the art of analysing company fundamentals to make an educated investment decision.

Cagr formula excel