Listed for Year One and Three, this figure represents the compounded or annualized growth rate in a company's revenues, or sales. The one-year growth rate is calculated from the second fiscal year (FY2) to the most recently completed fiscal year (FY1) The three-year growth rate is calculated from the fourth fiscal year (FY4) to the most recently completed fiscal year (FY1).
Origin
This information is taken from the company’s annual and quarterly income statements for the time period.
Benefit
Revenue growth is the best gauge of how rapidly a company’s core business is growing.
Example:
As of August 1998, Party City, a small chain of party-supply stores, had boosted its sales at a 152% annualized clip over the past three years. Over the trailing one-year period, growth was even faster: 192%.
For the Pros
By comparing the three-year annualized growth rate with the one-year growth rate, you can see whether a company’s revenue growth is speeding up or slowing down.