compound annual growth rate

Meaning

1. 1nouncountable

   The average yearly rate at which an investment or business grows over a period, assuming steady compounding.

   Grammar: Often used with 'the' or 'a' and followed by 'of': the compound annual growth rate of 5%.

   Patterns

   • compound annual growth rate of something
   • calculate the compound annual growth rate
   • compound annual growth rate over a period

   The company's revenue has a compound annual growth rate of 8% over the last five years.

   Investors often compare the compound annual growth rate of different funds.

   We calculated the compound annual growth rate to see how the business performed.

Word forms

Common combinations

calculate the compound annual growth rate

You can calculate the compound annual growth rate using a simple formula.

compound annual growth rate of X%

The economy achieved a compound annual growth rate of 3% last decade.

average compound annual growth rate

The average compound annual growth rate for the industry is 6%.

high compound annual growth rate

Tech startups often show a high compound annual growth rate.

Synonyms and how they differ

CAGR

The abbreviation is more common in informal business writing and speech.

annual growth rate

This is simpler and does not assume compounding, so it can be misleading for long periods.

Word family

CAGR abbreviation

Short form of compound annual growth rate.

Commonly confused: compound annual growth rate or simple growth rate?

Practice

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Write a sentence using “compound annual growth rate”, then check it and compare it with the examples above.

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