Compound Monthly Growth Rate (CMGR) Calculator
Use our free Compound Monthly Growth Rate (CMGR) calculator to evaluate the quarterly rate of change in a financial metric.
What is Compound Monthly Growth Rate?
The compound monthly growth rate (CMGR) is a measure of a company's average monthly rate of growth for a financial metric. The CMGR is expressed as a percentage and accounts for the compounding effect by carrying over the financial gains and losses from month-to-month.
CMGR Formula
Formula
CMGR = (End Month Value / Start Month Value) ^ (1 / Months) - 1
Where
End Month Value = the end month financial metric value
Start Month Value = the start month financial metric value
Months = the number of months between (start month, end month]
CMGR Calculation Example
As an example, a company reports $20 million in monthly sales for December 2022, whereas, the previous year in December 2021, the company had $10 million in monthly sales.
Given the following:
End Month Value = $20 million
Start Month Value = $10 million
Months = 12
We then plug the values into the formula to get the CMGR:
CMGR = (End Month Value / Start Month Value) ^ (1 / Months) - 1
CMGR = ($20 Million / $10 Million) ^ (1 / 12) - 1 = 5.95%
The result of a 5.95% compound monthly growth rate (CMGR) indicates that the company monthly sales grew at a 5.95% compound growth rate every month within a 12 month period.
CMGR and Financial Analysis
Compound monthly growth rate (CMGR) is a mathematical formula that traders and investors use to analyze the financial performance of a company's earnings, sales, etc.
A positive CMGR indicates that a company's financial performance is improving. Whereas, a negative CMGR indicates that financial performance is declining.
For example, a 7% sales CMGR, means a company grew its sales by 7% every month within the investment period, and a -2% sales CMGR indicates company earnings dropped by 2% per month within an investment period.
