Revenue growth rate measures how much a company's sales have increased or decreased compared to a previous period. It is one of the most important indicators of business health and is closely watched by investors, lenders, and management teams for strategic planning.

The basic formula is: Growth Rate = (Current Revenue - Previous Revenue) / Previous Revenue x 100. For multi-year comparisons, CAGR provides a smoother picture: CAGR = (Current / Previous)^(1/Years) - 1. CAGR eliminates the effects of volatility between years and shows the steady annual rate that would produce the same overall growth.

For example, if revenue grew from $800,000 to $1,050,000 in one year, that is a 31.25% growth rate and a $250,000 absolute increase. If this growth occurred over three years instead, the CAGR would be 9.49%, meaning revenue grew at an average of about 9.5% per year. Tracking growth rates helps businesses set realistic targets and identify trends before they become problems.