Chapter 54. Modeling exponential growth

Question answered in this chapter:

  • How can I model the growth of a company’s revenue over time?

If you want to value a company, it’s important to have some idea about its future revenues. Although the future might not be like the past, you often begin a valuation analysis of a corporation by studying the company’s revenue growth during the recent past. Many analysts like to fit a trend curve to recent revenue growth. To fit a trend curve, you plot the year on the x-axis (for example, the first year of data is Year 1, the second year of data is Year 2, and so on), and on the y-axis, you plot the company’s revenue.

Usually, the relationship between time and revenue is not a straight line. Recall that a straight ...

Get Microsoft Excel 2013: Data Analysis and Business Modeling now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.