Growth rate
For a single period with a nonzero base, proportional growth is (ending value − starting value) divided by starting value. Compound annual growth over several equal periods instead uses (ending/starting)^(1/n) − 1 when the values and context permit that model. State the quantity, nominal or real basis and period before comparing figures. Percentage-point changes differ from percentage growth, and negative or zero starting values can make the usual interpretation unsuitable. Growth in revenue, EPS, dividends and value are different measures, not guaranteed to move together.
Worked example
Revenue rises from$1 million to$1.2 million in one year. Growth is($1.2 m −$1 m)/$1 m=20%. If EPS grows 20%, that does not by itself establish 20%growth in total profit or shareholder wealth.
Common mistake
Dividing by the ending value, confusing a percentage with percentage points, or assuming EPS growth proves higher dividends.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FM | Supporting | September 2026–June 2027 |