Hands-On Financial Modeling with Excel for Microsoft 365 by Shmuel Oluwa

Author:Shmuel Oluwa
Language: eng
Format: epub
Publisher: Packt Publishing Pvt Ltd
Published: 2022-05-20T00:00:00+00:00

Selecting profit and loss account growth drivers

Turnover is the most prominent item in a profit and loss account. It, therefore, makes sense to concentrate on identifying a driver for turnover and then relating some of the less significant line expenses to projected turnover.

Appropriate drivers could be year-on-year growth or inflation, or compound annual growth rate (CAGR). Let's take a look at these two drivers in more detail now.

Year-on-year growth

This is simply the growth from one year to the next. It is usually expressed as a percentage. Year-on-year growth in turnover from year1 to year2 can be calculated as follows:

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