Meaning
Revenue growth measures how sales changed versus the comparable prior period.
Formula
(Current revenue - prior revenue) / prior revenue
Practical reading
Positive growth supports the growth component, especially when profit and cash flow also improve.
Calculation detail
Revenue growth = (current-period revenue β comparable prior-period revenue) / prior-period revenue Γ 100. Annual growth should be compared with annual growth, and quarterly growth with the same quarter a year earlier when seasonality matters.
What to check
Healthy growth is more convincing when it is accompanied by stable margins, cash conversion and a clear source of demand rather than only an acquisition.
Limits and caveats
A weak prior period, currency movements or a large acquisition can make a growth rate look exceptional for one period.