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What is CMGR (Compounded Monthly Growth Rate)?
by Wooden (2,800 points) | 17 views

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Often this measured as the simple average of monthly growth rates. But investors often prefer to measure it as CMGR (Compounded Monthly Growth Rate) since CMGR measures the periodic growth, especially for a marketplace.

 

\(CMGR=\left(\frac{E V}{B V}\right)^{\frac{1}{n}}-1 \times 100\)

 

where:

EV = Ending value (Latest month)

BV = Beginning value (First month)

= Number of months

Using CMGR also helps you benchmark growth rates with other companies. This would otherwise be difficult to compare due to volatility and other factors. The CMGR will be smaller than the simple average in a growing business.

by Wooden (2,800 points)
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