Growth equation

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Posts: 3
Joined: Sat Feb 11, 2012 5:17 pm

Growth equation

Postby Garth » Thu Apr 17, 2014 5:15 pm

Hi guys,

My colleague and I were squirming around this morning trying to solve a seemingly silly question.

The conventional approach to determine month on month or year on year growth rates is to use the equation;
(A2 - A1) / A1

Yet an algebraically equal, quicker method is;
(A2 / A1) - 1

So why has the former become the standard, given that the latter is easier to work with?


Posts: 3
Joined: Wed Mar 12, 2014 6:05 pm

Re: Growth equation

Postby giancarp » Tue Apr 22, 2014 1:26 pm

Hi Garth,

I don't see any difference between the two approaches. Algebrically they are the same and in terms of computation both of them have precisely one subtraction and one division, so they will take the same number of CPU cycles to execute.

The big question is why squirming about something like this?

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