Chapter 42. Modeling Exponential Growth
How can I model the growth of a companyâs revenue over time?
If you want to value a company, itâs important to have some idea about its future revenues. Although the future may not be like the past, we often begin a valuation analysis of a corporation by studying the companyâs 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 on the x-axis the year. (For example, the first year of data is year 1, the second year of data is year 2, and so on.) On the y-axis, you plot the companyâs revenue.
Usually, the relationship between time and revenue will not be a straight line. Recall that a straight line always has the same ...
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