Compounded annual growth rate (CAGR) is a very common metric when looking at how fast a startup is growing. Unfortunately neither Excel nor Google has a formula named CAGR. Instead, you need to use the RRI function.

When you do this, there is one pitfall to avoid.

There are three parameters to RRI. The first is the number of values. The second is the starting value. The third is the ending value. E.g. =RRI(COUNT(A2:Z2),A2,Z2) to calculate the growth of the values in row 2, columns A-Z.

But this is wrong, as the second parameter need to be one fewer than the total number of values.

To compute the actual CAGR (assuming these are annual values) the correct formula is =RRI(COUNT(A2:Z2)-1,A2,Z2).

Who thought one fewer was the right number? That answer is lost to history. Apparently RRI was not one of the VisiCalc or Lotus 123 functions. It was added to Excel only in 2013.

By "Luni"


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