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I'm trying to calculate the compound growth rate of operating margin, in a 5 years span:

compound growth rate = 100% * ((M1 / M2) ^ (year - 1) - 1)

M1   = current operating margin
M2   = operating margin 5 years ago
year = 5

It works fine if both M1 and M2 are positive values. However, for enterprises that went from deficit to profit, the value growth rate would be a negative value.

How should I calculate the compound growth rate then?

daisy
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    See if the duplicate answers your question. There is no meaningful "growth rate" when the starting value is negative or zero. If the intent is to forecast out operating profit from a constant growth rate, you'll have to use different date to assume a growth rate. – D Stanley Nov 15 '23 at 04:04
  • *different data – D Stanley Nov 15 '23 at 04:13

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