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Neil Dsouza
Startup founder
Asked a question 9 months ago

What’s the difference between the growth rate and profitability.

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Profit simply means that what you are investing is less than what you are getting, if your are getting more than the total investment, than its a profit of that much amount that is the difference between the investment and return.

Growth simply means that the market demand for your product is continuing to expand and having a high demand.  So if your growth is rapid and also your getting profit for your business that means you are going on the right track, you can now expand your business.

After paying all the expenses like manufacturing expense, production expense  and all the other expenses , the money which is left in the bank will be the profit of the company.

On the other hand growth rate means that your visibility is increasing the in market and it is creating demand for your product, hence business is expanding. Growth rate is calculated by subtracting the year starting value from the final value, and then dividing the result by the starting value. Multiply this by 100 and get the growth rate.

To Determine the profit of the company, go through this example,

Company A had 1000 profits this year, and last year profit of 800. Subtract the last year profits from the current profits. In the above example, the difference in profits equals 1000 -- 800= 200 . After that Divide the difference between the profits by the prior profits. In our example, 200 / 800 equals 0.25, or a 25 percent increase in profits.

On the other hand growth means that your business is expanding and now its visibility is increasing, so higher demand is expected . It is calculated by subtracting the year starting value from the final value, and then dividing the result by the starting value and multiplying this by 100 .

 

 

What’s the difference between the growth rate and profitability.