Query regarding calculating CAGR

[Samiya Chattha]

Respected Sir

There are different methods and formula to calculate compound annual growth rate.

one of the way is through Regression (taking log of the values..examining beta value...then after taking antilog.....subtracting1 from that value)

The problem is that, value we get through regression is three digit (say (105% or 200%) which seems to be wrong as growth rate can never be too high over a period of one year. Also values are different in case of each formula.

Please advice which is the best method and how to calculate compound annual growth rate(CAGR)

[Neetu Sharma]

good noon Samiya Chattha

u may also calculate CAGR through linear regression with the help of spss. Then u will get the value of standardize beta, then subtract 1 from this beta, multiply it with 100. that will be the Cagr of any particular item.

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[Samiya Chattha]

Ok, Thank You.

But in my case results are bit complicated. It is not what is supposed to be.

[Renu gholia]

Dear  Samiya Ma'm

The CAGR  yes can be calculated with regression but the alternative formula is also available

In excel in the last column of the series =(put the ending value of your series and divided it by the first value of the series) then raise to the power 1/ number of years

Then -1 and then *100 the result will give you the value of CAGR in %. 

 

 thanking You   

Renu Bala 

Ph. D Scholar

[Thakur.hpk]

as per my knowledge the formula varies according to data....means cross section, time series.... isn't it? please through some light on it.

Kavita Thakur 

Research Scholar

[Samiya Chattha]

Dear Renu Mam

yes there are many formulas for calculating CAGR but the efficient and reliable way is  only through regression as per my knowledge.

 

[Samiya Chattha]

The method or formula for calculating (growth over the period of time) would remain same whether data is cross section or  time series in nature. the way of its interpretation is different 

On Thu, May 8, 2014 at 9:53 PM, Thakur.hpk <thaku...@gmail.com> wrote:

[Renu gholia]

Dear Samiya Ma'm

No dear both are efficient in the same way and authenticated also but the way of calculation are different.

Example Result will similar

 

[Balraj Saini]

Dear Friends,

Very Good Afternoon!

You could have a look at this video to calculate CAGR. It explains in a very simple and effective manner.

https://www.youtube.com/watch?v=EMhrRmse-r4

Thanks and regards

Balraj

[Samiya Chattha]

Thanks everyone

[Reeti Gupta]

greetings to all learners..

In case of time series data, three types of growth rates can be calculated i.e. linear, compound (CGR), & exponential (EGR). 

Linear can be calculated when data relating to a variable shows a fairly constant increase or decrease. Compound when a variable increases or decreases by a constant percentage per annum. Exponential also indicates constant growth rate in the variable y. The only difference between compound and exponential is that in CGR we take the logs of Y to the common base 10 whereas in EGR we take the log of Y to the natural base e.

Formula to calculate CGR is [antilog (bi)-1] * 100

Steps to calculate it on Excel using formula function are:

1.       Calculate Log value of Y [=log ]

2.       Calculate SLOPE or b (log value of y, time x i.e. 1,2,3). [=slope]

3.       Calculate antilog or exponential value of above  [= EXP]

4.       Antilog value-1*100.

Hoping that this information is of some use. 

Regards