Number of new members = 50 x (1 + 49%) ^ 24= 50 x 1.49^ 24= 716,870
CMGR can help investors estimate future growth through the growth rate over a certain time span, but there are many limitations when using it:
The calculation result of CMGR will increase exponentially. When the base value is small, a more reasonable growth rate can be obtained. However, if the base value is large, the value calculated using CMGR may exceed the revenue that can be obtained from normal operations. For example, in the above distance, 50 new users are used as the basic calculation value. It is calculated that 716,870 new users can be obtained in the same month two years later. However, if the base value is 500,000, the calculation result is an impossible increase in membership.
When using CMGR to calculate monthly changes that fluctuate too much, serious evaluation bias will occur. For example, in five months, 30 new members are gained in one month, 60 new members are gained in the next month, and 90 new members are lost in the next month. In the case of such a large fluctuation in membership growth, using CMGR will obtain a relative evaluation value, but it cannot truly reflect the high volatility risk of the business.
CMGR is applicable to the calculation of compound interest growth model, but not to the calculation of simple interest growth model. For some investments with interest as the source of income, the calculation principle of CMGR is applicable to compound interest growth, that is, as time goes by, the benefits will grow faster. For simple interest growth, CMGR will provide an incorrect calculation result.
2. Quarter-on-quarter (QoQ)
Quarterly comparison is the ratio of change of various values in a relatively continuous three-month quarter, for example, the operating profit of one quarter compared with the previous quarter.
Publicly listed companies must publish financial reports every quarter, also known as 10-Q reports, so corporate managers can use the 10-Q form to conduct quarterly performance analysis to evaluate whether the current strategy has achieved the expected operating returns, and adjust the operating strategy in a timely manner based on performance in consecutive quarters to obtain better operating results. For example, the types of products sold in different seasons can be determined by the quarterly year-on-year increase rates of different products in summer and winter.
Investors can use the data in the financial report to perform quarterly calculations of various operating indicators.
Regarding stock price trends, some investors will also perform quarterly calculations and estimate whether the stock price will reach a peak or bottom based on changes in the rise and fall ratio, as one of the reference indicators for determining investment decisions.
