Enter historical free cash flows (positive numbers) with their corresponding years to calculate the compound annual growth rate (CAGR). For two data points, a direct CAGR is used; for more points, a more precise log‑linear regression is calculated.
| Year | Cash Flow | Action |
|---|---|---|
Calculating growth rate...
CAGR stands for compound annual growth rate. It expresses how much a value, such as cash flow or revenue, has grown per year on average, assuming the growth compounded smoothly over the period.
CAGR equals the ending value divided by the beginning value, raised to the power of one divided by the number of years, minus one. For example, growing from 100 to 200 over 4 years gives a CAGR of about 18.9% per year.
A simple arithmetic average of yearly growth rates overstates true growth because it ignores compounding and is distorted by volatile years. CAGR captures the single smoothed rate that actually connects the start and end values, which makes it more useful for comparing investments.