Calculating CAGR if there is a Loss in the First Year
You canít calculate that. Why not?
Letís look at the formula for calculating CAGR:
CAGR = (ending amount / beginning amount)(1 / # of years)
Mathematically, because youíre taking a root of a number, if you have a negative beginning amount and a positive ending amount, youíd be taking the root of a negative number. Unless you have an odd # of years, you canít compute this mathematically without going into imaginary numbers
The best way to deal with situations where you have a negative initial value is to just footnote it and calculate CAGR based on the first positive initial value you have. So, in your example, you had a project that lost 500 in year 2016, then gained 1400 in year 2017, and ended in year 2018 with 1200, you might write the following:
Revenues went down from 1400 to 1200 during the period 2017-2018 (CAGR of -14.29%). Note that this excludes the initial 2016 year, when the project lost 500.