CAGR is compound annual growth rate. It measures the smoothed annual growth rate of an investment or metric over multiple years, assuming it grows at a steady rate. CAGR = ( Ending Value / Beginning Value )1 / n − 1 Ending Value = final value Beginning Value = initial value n = number of years Why it’s used: Smooths volatile year-to-year growth into a single, comparable rate (common in DCF and equity research) Enables fair comparison across companies or business segments with different growth patterns Summarizes long-term growth trends in a simple, intuitive metric
Learn CAGR with interactive examples and practice exercises in our Performance Metrics module.
This interactive learning module helps you understand CAGR through hands-on practice and real-world examples.