Monthly comparison can be used to analyze various more detailed numerical changes, such as stock price growth, monthly sales revenue of enterprises, website visits, etc. Because monthly comparison values are produced every month, there will be dense monthly comparison values in the process of operation or economic development. After being produced into data analysis charts, the development process of economic activities can be observed more intuitively. At the same time, monthly comparison is very suitable for analyzing the business progress of start-ups and timely obtaining the effectiveness of various new strategies, but for mature companies, it is more meaningful to use quarterly comparison or year-on-year comparison.
The monthly month-on-month value fluctuates greatly as the business progresses and is easily affected by various events, such as holidays, natural disasters, etc., which will directly affect the calculated value of the monthly month-on-month value.
Therefore, analysts can summarize some information by tracking and analyzing the monthly month-on-month values, such as when sales will surge in the year and when inventory needs to be expanded in advance in future development.
Some people believe that the basic monthly growth rate cannot accurately estimate the return on investment, and therefore hope to obtain the month-on-month growth rate through data with a longer time span to estimate the future return. At this time, they will use the compound monthly growth rate (CMGR). After obtaining the CMGR, investors can use a specific company to estimate the possible future returns.
The calculation method of CMGR is:
CMGR = (value of the last month in the cycle)^ (1/month difference) / (value of the first month in the cycle) – 1
For example, using CMGR to calculate the compound monthly growth rate of new paying members of a company in the past 5 months:
| month | Number of new members |
|---|---|
| January | 10 |
| February | 12 |
| March | 20 |
| April | 35 |
| May | 50 |
The company’s compound monthly growth rate during these five months is:
CMGR = [50 ^ (1/4) / 10] – 1= 5^ (1/4) – 1= 49%
The way to calculate future benefits using CMGR is:
Current month value x (1 + CMGR) ^ Monthly difference
Using a two-year time frame as an estimate, the company will receive the following number of new members in May:
