How to Calculate Revenue Growth for 3 Years

by C. Taylor, studioD

Projecting your anticipated revenue into the future calculates the expected growth of the company. The most difficult task when projecting three years of revenue growth is knowing the current growth rate. However, this dilemma is solved by using past growth rates. If you have the current and last year's balance sheets for a company, calculating the historic growth rate requires only simple division. Armed with this historic growth rate, you can project the revenues three years into the future.

Divide the current year's total revenue from last year's total revenue. This gives you the revenue growth rate. For example, if the company earned $300,000 in revenue this year, and earned $275,000 last year, then the growth rate is 1.091.

Cube this number to calculate the growth rate three years from now. In the example, 1.091 raised to the power of three gives you a three-year growth rate of 1.299.

Multiply this growth rate by the current total revenue. In the example, the expected total revenue 3 years from now would be $389,700.

Subtract the current total revenue from this figure to calculate how much of that figure is growth. In the example, revenue three years from now is expected to increase by $89,700.

About the Author

C. Taylor embarked on a professional writing career in 2009 and frequently writes about technology, science, business, finance, martial arts and the great outdoors. He writes for both online and offline publications, including the Journal of Asian Martial Arts, Samsung, Radio Shack, Motley Fool, Chron, Synonym and more. He received a Master of Science degree in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences at College of Charleston. He also holds minors in statistics, physics and visual arts.

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