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CAGR (Compound Annual Growth Rate)
Definition
The average annual growth rate of a metric over a specified period, assuming growth is compounded each year. CAGR smooths out fluctuations to show a consistent rate of growth over time.
How It's Calculated
((Ending value ÷ Beginning value)^(1 ÷ Number of years)) − 1
Example
A snack brand grows from $10 million in sales to $20 million over 4 years. The CAGR is approximately 18.9%, representing the average annual growth rate over that period.
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