# Compound annual growth for sales volumes

#### MikeMichaelMIke

I'm trying to calculate the difference in sales growth over time. Basically I want to understand by how much have our sales increased since 2012, compared to now, on an average yearly basis. Meaning, sales have increased by an average of X% every year over the seven year period.

According to my understanding, you can use the compound annual growth (CAGR) formula to calculate this.

I understand these steps and am having no problem implementing the formula, but I am confused about the following:

I am measuring the growth of my sales by total tonnes of product sold. What I have done is taken my total tonnage for the year in 2012, and used the total tonnage for the year in 2018, and used this to calculate CAGR.

I sold 431.28 tonnes in 2012 and sold 3 032.42 tonnes in 2019 (financial year). This has given me a CAGR of 32.13%, using these two values over 7 years. Is this correct?

Should I have instead used the tonnage of 2012 (when sales began) and then used the total cumulative sales in 2018 (i.e. the total sales since 2012 up to 2019)? Meaning, using 431.28 tonnes and 14 516.43 (cumulative since 2012) over seven years, which gives me a CAGR of 65.26%.

Which of these two methods are correct? Or are they showing different things?