Excel offers us multiple configuration options. As an office automation tool, it allows thousands of calculations to be made in just minutes and simplifies day-to-day work tasks. Thanks to Excel, tasks such as calculating the Annual growth rate are very easy to do with percentage formulas.
How do you calculate annual growth rate in Excel?
Calculating the growth percentages is done automatically and in a very practical way only with the application of formulas. There are many ways to do the calculation, but this is the easiest formula to apply.
- % Growth = ((current value – previous month value) / (previous value)
When applying this formula in Excel in the cell where you want to show the percentage results, the operation will be performed.
- =((B3-B2)/B2)
B2 represents the value obtained from the previous month, that is, the cell prior to the month being evaluated. Cell B3 represents the current balance, which you want to evaluate the percentage of growth.
Note: In order for you to see the percentage value in the cell, you must change the format to percentage. Right click on the cell, select the Format Cell option and finally select the percentage category.
Alternative formula (TIR.NO.PER or XIRR function)
This formula is generally used to evaluate the cash flow value on a periodic basis. The meaning of its syntax is TIR.NO.PER and it means “values.dates.estimate”. In case the version of Excel is in English, then the name of the function is XIRR.
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Values: is the range of data used to measure the rate.
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Dates: data evaluation period.
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Estimate: is optional and is used to find an estimated value that approximates the IRR.
All added values must have a trailing minus sign (-) for the calculation to succeed. Applying this formula in Excel it would look like this:
- =TIR.NO.PER(B2:B13;C2:C13)
Where column B represents the value and column C represents the date.
Finally, you can calculate the average of the results obtained by comparing the result of a month with other monthly values. It is a default function available and you only access it by typing the word average and putting in the values to calculate.
- =AVERAGE(B2:B13)
Calculation of the average of each month in relation to the total
Once the total sum of all the values to be evaluated has been calculated, the percentage of sales made in that period of time can be calculated in relation to the entire year. The formula is just as simple as the one used to calculate the average. Divide the total sum of annual sales by the general total of sales corresponding to that month.
- =B2/$B$14
Note: The sum calculation formula is simple =Sum(B2:B13). What is indicated in this formula is that the sum of all the values between B2 and B3 must be made.
Add graphic icons
To show the results in a more graphical way that is understandable at a glance, you can add some colored icons in the shape of an arrow. Each arrow has a meaning, if it is green and upwards it means that there was a growth in sales, if it is yellow there were no changes with respect to the previous period and if it is red and downwards it means that there were losses.
To apply this change it is necessary to add one more formula in another cell. The result obtained from the formula is only 1= there was growth, 0= it remains the same and -1= there were losses. you must start from the second period, because the first month has no point of comparison.
- = SIGN(B3-B2)
Then select the result obtained in all the cells and from the Home tab click on the Conditional Format option. Select the set of icons you prefer and the changes will be applied immediately.
To remove the numbers next to the icon you must change the formatting rules, from the same Conditional Formatting option you can manage the rules. Select only show symbol, apply the changes and everything will be perfect.
