Mastering Business by Measuring Growth
An important part of mastering business is creating value in the markets that we serve that results in revenue growth. Rate of Change charting shows we are growing and there is momentum to continue to grow.
Rate of Change (ROC), is the percentage change over a specified time frame. It is one of the most basic ways to measure growth and momentum. For the three-month ROC (3/12 ROC), the combined revenue for the last three months is divided by the combined revenue for the same three months for the prior year; thus, seasonality is eliminated. The twelve-month ROC (12/12 ROC) measures the combined revenue for the last twelve months divided by the same twelve months for the prior year. The result is multiplied by 100. Thus,
A ROC = 90 says that revenue was 10% lower than the same time period last year
A ROC = 100 says that revenue was the same as the same time period last year
A ROC = 110 says that revenue was 10% higher than the same time period last year
For our Executive Legacy members, the chart shows the ROC for the combination of our member organizations; we have a strong growth in 2018
12/12 ROC is a 131.28 means the combined revenue of Executive Legacy members for 2018 was 31.8% higher than 2017 for those same members.
A 3/12 ROC is a 122.9, then revenue for the last three months was 22.9% higher than the same three months last year.