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Trying to calculate CAGR = (end value/beginning value)^1/t - 1

Looking at company X's operating income from its income statement, it starts with a positive operating income and its end value is negative.

Company X's operating income:

  • 2020 = (370.2)
  • 2019 = (272.2)
  • 2018 = 6.8

Attempting to calculate the CAGR from 2018 to 2020 produces this calculation (-370.2/6.8)^1/2 - 1 however it results in an error

How can I calculate the annual growth rate over the two years after 2018?

Is there another way to denote the average annual change in values that equates to CAGR?

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  • $\begingroup$ As you point out, CAGR would be valid only for positive numbers. It is therefore better applied to the total company value or revenue, rather than the profit/loss $\endgroup$ Commented Apr 3, 2021 at 19:32
  • $\begingroup$ It provides an alternative to my problem. Average annual growth rate provides a slightly different answer to my analysis. A solution I found was to add an additional previous year to the CAGR calculation. Because you cannot take an even root of a negative, adding another year allowed me to use the cube root to get a CAGR. $\endgroup$ Commented Apr 4, 2021 at 17:15

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