CAGR Calculator

Compound annual growth rate, or CAGR, is the constant annual rate that would take a starting value to an ending value over a given number of years. It smooths a lumpy path into one comparable growth figure.

If revenue grows from 100 to 200 over five years, CAGR answers: what steady annual growth rate would produce the same overall doubling? It does not claim the actual growth was steady. It gives a clean equivalent rate for comparison.

Growth compounds multiplicatively. A 50 percent gain followed by a 50 percent loss does not return to the starting value; it leaves 75 percent of the original. Arithmetic averages can hide this because the average of +50 and -50 is zero, while the compound result is negative.

CAGR respects compounding by using the ratio of ending value to beginning value. That makes it better for investments, revenue, user counts, and any metric where each period builds on the previous one.

CAGR hides volatility, sequence, and interim drawdowns. Two businesses can have the same CAGR while one grew steadily and the other collapsed halfway through before recovering. For risk assessment, that difference matters.

CAGR also depends heavily on the chosen start and end points. Selecting a trough as the start or a peak as the end can make performance look unusually strong. Good analysis pairs CAGR with the actual time series, volatility, and context.

CAGR is best used as a comparison tool. It can compare business segments, funds, markets, products, or operating metrics over equal time horizons. It is less useful for short periods or metrics that can be zero or negative, where the formula may break or become hard to interpret.

The clean rate is only the headline. The responsible question is what path produced it, how durable it is, and whether the underlying metric is meaningful.