Mastering the Art of Calculating Month-on-Month Growth Percentage- A Comprehensive Guide

How to Calculate Month on Month Growth Percentage

Calculating the month on month (MoM) growth percentage is a fundamental skill in financial analysis, business performance evaluation, and economic forecasting. It allows you to compare the growth rate of a specific metric from one month to the next, providing valuable insights into trends and changes over time. In this article, we will explore the steps and formulas required to calculate the month on month growth percentage accurately.

Understanding the Concept

Before diving into the calculation, it’s essential to understand the concept of month on month growth percentage. This metric compares the change in a particular value between two consecutive months. It is often used to analyze sales, revenue, customer acquisition, or any other metric that is measured on a monthly basis.

Formula for Calculating Month on Month Growth Percentage

To calculate the month on month growth percentage, you can use the following formula:

Month on Month Growth Percentage = [(Value in Current Month – Value in Previous Month) / Value in Previous Month] 100

This formula calculates the difference between the value in the current month and the value in the previous month, divides it by the value in the previous month, and then multiplies the result by 100 to convert it into a percentage.

Step-by-Step Guide to Calculate Month on Month Growth Percentage

1. Identify the values for the current month and the previous month. Ensure that both values are in the same unit of measurement.
2. Subtract the value of the previous month from the value of the current month.
3. Divide the difference obtained in step 2 by the value of the previous month.
4. Multiply the result from step 3 by 100 to convert it into a percentage.
5. The final result is the month on month growth percentage.

Example

Let’s say you want to calculate the month on month growth percentage of your sales revenue for the month of June. The revenue for May was $10,000, and the revenue for June was $12,000.

1. Subtract the value of May from the value of June: $12,000 – $10,000 = $2,000
2. Divide the difference by the value of May: $2,000 / $10,000 = 0.2
3. Multiply the result by 100: 0.2 100 = 20%
4. The month on month growth percentage for June is 20%.

Conclusion

Calculating the month on month growth percentage is a straightforward process that provides valuable insights into the performance of a business or metric over time. By following the steps and formula outlined in this article, you can accurately determine the growth rate and make informed decisions based on the data. Remember to always compare values in the same unit of measurement and consider other factors that may influence the growth rate.