Revenue growth ratio shows the rate a company's revenues have grown or declined over the last year.
To calculate year over year revenue growth the following equation applies.
Revenue Growth = (Current Year Revenue - Previous Year Revenue) / Previous year revenue
Let's calculate revenue growth for Company A, who has a a current revenue of $200 and a previous year revenue of $150.
($200 - $150)/$150 = 33.33% Revenue Growth. This means that Company A has increased its revenues by 33.33% compared to last years revenue.
The revenue growth rate helps investors understand how much a company's revenues have increased or declined over the last year.