Forums › ACCA Forums › ACCA FM Financial Management Forums › geometric average
- This topic has 4 replies, 5 voices, and was last updated 11 years ago by oogabooga.
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- June 5, 2010 at 6:42 pm #44447
Can anyone clarify this calculation formula please?
Thanks, TimJune 6, 2010 at 8:35 pm #62209Hi,
I believe you mean this one:
you have for example 5 years so 4 periods of growth (from yr 1 to 2, 2 to 3, 3 to 4 and 4 to 5). Then to see the geometric growth divide the newest data between the oldest and calculate the root. (if you are considering three periods you will calculate the 3 root. If two the square root and so on and finally deduct 1 and multiply by 100 to get a percentage.
2004
26
2005
23
2006
21
2007
19
2008
40
to calculate growth from 2004 – 2008 put 40/26 then the 4 root, deduct 1 and multiply by 100 to get the percentage.
if you want to calculate growth from 2004 to 2006, 21/26 square root (because two periods of growth) and then less 1 multiply by 100.
hope this helps
AmarainOctober 30, 2013 at 11:13 am #144127not working Amarain.
November 5, 2013 at 5:27 pm #144632It should work. If you have a scientific calculator, you should have a symbol that looks like this, but without the number 3.
https://www.mathatube.com/images/cubed_root_symbol.png
On my calculator, instead of the 3, there is a square, coloured in. To the right of the diagonal line, there is another square, this one not coloured in. In Amarin’s example above, enter a 4 to the left of the diagonal line, and enter 40/26 to the right.
November 5, 2013 at 6:08 pm #144635(latest dividend \ earliest dividend)1/n -1
n=years of growth
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