Listen to a Business English Dialogue About Growth rate
Harper: Hi Eleanor, do you know what “growth rate” means in finance?
Eleanor: Yes, it’s a measure of how fast a company’s revenue, earnings, or other financial metrics are increasing over time.
Harper: That’s correct. How is growth rate calculated?
Eleanor: Growth rate is typically calculated by comparing the difference between the current and previous values of a financial metric and expressing it as a percentage change.
Harper: I see. Why is growth rate important for businesses?
Eleanor: Growth rate is important because it indicates a company’s ability to expand its operations, increase market share, and generate higher profits in the future.
Harper: That sounds crucial. Are there different types of growth rates?
Eleanor: Yes, there are various types of growth rates, such as revenue growth rate, earnings growth rate, and customer growth rate, depending on the specific aspect of the business being measured.
Harper: Got it. How do investors use growth rate when evaluating a company?
Eleanor: Investors often use growth rate to assess a company’s potential for future success and to determine whether its stock is undervalued or overvalued relative to its growth prospects.
Harper: Thanks for explaining, Eleanor. Growth rate seems like a key factor in investment decision-making.
Eleanor: You’re welcome, Harper. It’s an essential metric for investors to consider when analyzing companies and making investment decisions.