Calculate sales growth percentage from previous and current sales, project future sales at a growth rate, find prior sales, or get compound growth (CAGR).

Sales Growth Formula

The following formula calculates sales growth for a positive prior-period sales amount. A decline to zero is −100%; percentage growth from a zero base is undefined.

SGP = (CP-PP)/PP × 100

Where SGP is the sales growth percentage (%)
CP is the current period sales ($)
PP is the prior period sales ($)

To calculate sales growth, subtract prior sales from current sales, divide by positive prior sales, then multiply by 100. Reverse solves use current = previous × (1 + growth/100). The previous-sales inverse is not unique at zero current sales and −100% growth. Compound growth uses [(ending/starting)^{(1/elapsed periods)} − 1] × 100; only yearly intervals are CAGR. It summarizes endpoints, not the intervening path. A zero ending amount gives the −100% endpoint-power extension, not an observed rate for every period.

Sales Growth Definition

What is sales growth? Sales growth is a measure of the rate of increase or decrease in sales displayed as a percentage of the total prior sales compared to the current sales. This sales growth rate is normally displayed as a percentage, but it can also be displayed as a simple absolute increase, which is calculated by subtracting prior sales from the current sales.

Example Problem

How to calculate sales growth?

First, determine the prior period sales.
For this example, we are analyzing a shoe store. The sales from the previous month came out to be $75,000.00.
Next, determine the current period sales.
During this current month, the shoe store is projected to generate $85,000.00 in sales.
Finally, calculate the sales growth.
Using the formula, we find the sales growth to be: ($85,000.00-$75,000.00)/($75,000)*100 ≈ 13.33% increase in sales.

FAQ

Is sales growth a profitability ratio? Typically, sales growth is measured and calculated with revenue instead of profit, so it would not be the same as a profitability ratio. Sales growth does not determine profitability. Profit growth needs separate interpretation, especially when its prior value is zero or negative.

Is sales growth good? In most scenarios, sales growth is a good thing for a business. Some cases where this would not be good would be if the sales growth was accompanied by a decrease in profit, or if a sudden increase in sales would deplete your inventory and lead to a shortage of goods for future customers. That would lead to unhappy customers and potential losses in the future.

Why is sales growth important? Positive sales growth tracks revenue expansion on the comparison basis used. It does not by itself establish higher profit; costs, margins, returns, price changes and acquisitions also matter.

What is organic sales growth? Organic sales growth measures growth from ongoing operations on a comparable basis, commonly excluding acquisitions, divestitures and currency effects. Definitions vary by company. It can include sales generated by paid advertising; it does not mean only unpaid recommendations.