Compound annual growth rate (CAGR), is a measure of the average annual growth rate of an investment or business over a specific period, assuming steady growth. It provides a smoothed annual growth rate by accounting for compounding effects. CAGR is often used to assess investment performance, evaluate business growth, or project future growth potential. It helps to provide a clear picture of the overall growth rate, taking into account the compounding effect over multiple periods, rather than considering simple arithmetic averages.
