Revenue growth is the increase (or decrease) in a company’s sales from one period to the next. Shown as a percentage, revenue growth illustrates the increases and decreases over time identifying trends in the business.
The formula for calculating revenue growth is:
Amounts shown in thousands (000’s). If your revenue for this year is 4,926 and for last year it was 4,531 your revenue growth would be:
(Excerpts from Financial Intelligence, Chapter 25 – The Investor’s Perspective)
How much growth is reasonable? It depends on the company, the industry, and the economic situation. A growth rate of 10 percent a year, sustained over time, is remarkably good. (According to research by Bain & Company, only about 10 percent of global companies sustain an annual growth rate in revenue and earnings of at least 5.5 percent over ten years while also earning their cost of capital.)