The Compounded Monthly Growth Rate (CMGR) is a common indicator used to measure one business' financial performance over a given period of time. While the Month-over-Month growth rate is often simply computed as the average of the monthly growth over a period of time, the CMGR takes the effects of compounding into account. This way, it smooths out the effects of short-term fluctuations.
The typical components required to compute one business revenue's CMGR over a given time period are:
The revenue in the first month considered
The revenue in the last month considered
The total number of months in the period
The formula is then:
CMGR = (Revenue Last Month / Revenue First Month)^[1 / Total months] - 1
