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Absolute Percentage Growth Definition
An Absolute percentage growth refers to the rate of increase in the value of an asset. It refers to the appreciation in value of an asset or stock displayed as a percentage. It is also called absolute return or absolute growth. This representation of increase in value is not in relation to another asset, it is just a representation of increase in the value of an asset.
Some people might be confused with the usage of ‘absolute percentage growth’ because ordinarily, absolute connotes a sense of totality. However, absolute percentage growth simply shows an increase in the value of an asset over a period of time.
A Little More on What is Absolute Percentage Growth
When calculating the absolute percentage growth of an asset, no comparison is done between the value of the asset which might be a benchmark in the market. Rather, the absolute percentage growth of an asset is the percentage of increase that can be attributed to the asset over a period of time. In the investment industry, performance is measured using difference means, for instance, different market types have distinct benchmarks used in evaluating the performance of other assets in the market. The percentage of increase in funds are often tracked and measured against other funds using the yardstick in the market, the market index. A mutual fund up to 30% in a year has a relatively good return. Most times, growth is measured on a relative basis. While institutional investors place more importance on relative returns or growth, real investors consider the absolute growth or returns.
Reference for “Absolute Percentage Growth”
Absolute Percentage Growth
Export performance: success determinants for New Zealand manufacturing exporters, Thirkell, P. C., & Dau, R. (1998). European Journal of marketing, 32(9/10), 813-829. This study uses a large and representative sample of New Zealand manufacturing exporters to empirically test and validate the model of export performance as proposed by Aaby and Slater. It also formulates a 20-item additive export performance scale that is based on both objective and subjective measures and this scale is found to be reliable and normally distributed.
The real term structure and consumption growth, Harvey, C. R. (1988). Journal of Financial Economics, 22(2), 305-333. This paper proves that the expected real term structure contains information that can be used to forecast consumption growth. The real term structure contains more information that two alternative measures which are lagged consumption growth and lagged stock returns. The real term structure appears to have slightly more forecasting power than the leading commercial econometric models.
Planning and financial performance of small, mature firms, Bracker, J. Y., & Pearson, J. N. (1986). Strategic management journal, 7(6), 503-522. This article creates a classification scheme of planning process sophistication in small firms, categorizes these firms based on the planning process sophistication and also examines the existing relationship between planning process sophistication and the financial performance of a select group of small, mature firms.
Regulation and growth, Djankov, S., McLiesh, C., & Ramalho, R. M. (2006). Economics letters, 92(3), 395-401. This paper establishes that countries with better regulations experience faster growth using objective measures of business regulations in 135 countries. It also explains that improving from the worst quartile of business regulations to the best suggests a 2.3 percentage point increase in terms of annual growth.
Time series decomposition and measurement of business cycles, trends and growth cycles, Zarnowitz, V., & Ozyildirim, A. (2006). Journal of Monetary Economics, 53(7), 1717-1739. This paper compares cyclical movements in levels, deviations from trend, and smoothed growth rates for both the quarterly real GDP and the monthly US coincident index while using the phase average trend. It also compares alternative trend estimates, deterministic and stochastic, linear and nonlinear as well as the corresponding series of deviations from these trends.