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Dear tutor,
Can u guide me how to calculate “geometric average growth” in this question? It’s definitely not as a average calculation
Turn over
2008: 28m
2007: 24m
2006: 19.1m
2005: 16.8mTurnover growth
2008: 17%
2007: 28%
2006: 14%
2005Geometric average growth : 18.6% ????????
This is fully explained in my free lectures!!!
This certainly is an average calculation – it is the geometric average which is what we always use for growth rates.
The turnover grew from 16.8 to 28 over 3 years of growth.
Therefore the average growth rate = (third root of 28/16.8) – 1 = 0.186 (or 18.6%)
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