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Contributor
Posts: 69

# Growth rate

Hello

I have an example and I am not sure how to handle with the data

 Firm Sales Year Change A 120 2007 -8% A 130 2006 -7% A 140 2005 B 15 2006 25% B 12 2005 20% B 10 2004

Should I use Lines A-2005 and B-2004 in column "change" as 0 or missing data?

Thanks a lot!

Accepted Solutions
Solution
‎08-30-2016 12:22 AM
Posts: 5,042

## Re: Growth rate

Either,

Change = (Sales(y) - Sales(y-1)) / Sales(y-1);

if Sales(y-1) is unknown (missing) then Change should be missing.

if Sales(y-1) is zero (new product, new company) then change should be +Infinity

PG

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Super User
Posts: 11,752

## Re: Growth rate

I would say it would depend on what your are going to do with that change variable later. If I wanted average change rate from year to year I would not want the value to be 0 as you would end up with an n of 3 and (0 + -7 + -8)/3 would notably different from the apparent -7.5% change average. (Noting that averaging percents is a dangerous activity in general).

But for some modely I may need a 0 as a baseline.

Solution
‎08-30-2016 12:22 AM
Posts: 5,042

## Re: Growth rate

Either,

Change = (Sales(y) - Sales(y-1)) / Sales(y-1);

if Sales(y-1) is unknown (missing) then Change should be missing.

if Sales(y-1) is zero (new product, new company) then change should be +Infinity

PG
☑ This topic is solved.