Growth Accounting

A set of methods for measuring and reporting the economic value of an organisation's workforce, including recruitment costs, training investment, experience, and productivity contributions. Human capital accounting seeks to address the gap between traditional financial reporting and the true value that people create within knowledge-intensive enterprises.

The percentage change in a metric from one year to the next, used to assess trends while neutralising seasonal effects. YoY growth rates in revenue, productivity, and intangible asset investment are fundamental to performance evaluation, valuation modelling, and growth accounting analysis.

The rate at which a firm increases its output relative to its inputs over time. Productivity growth is a key indicator of operational efficiency and long-term competitiveness, closely linked to investment in intangible assets such as technology, training, and process improvement.

The portion of economic output growth that cannot be explained by measurable increases in labour and capital inputs, named after economist Robert Solow. The Solow residual is often interpreted as a measure of technological progress and is closely related to total factor productivity, capturing the output gains attributable to intangible factors such as innovation, education, and institutional quality.

The percentage increase in a company's revenue over a specific period, typically measured year-over-year or quarter-over-quarter. Revenue growth rate is a fundamental measure of business expansion, market traction, and the effectiveness of go-to-market strategy.

The annualised rate of return that smooths out growth over multiple years, calculated as (ending value / beginning value)^(1/years) minus one. CAGR is used to compare growth trajectories of companies or metrics across different time periods.

A go-to-market strategy where the product itself serves as the primary driver of customer acquisition, conversion, and expansion, rather than traditional sales-led approaches. PLG companies offer free trials, freemium tiers, or self-service onboarding that allows users to experience value before engaging with sales teams.

The process of projecting a company's future growth trajectory based on historical data, market conditions, and investment patterns. Incorporating intangible asset data and productivity trends significantly improves forecast accuracy and reduces investor uncertainty.

What is Gross Value Added (GVA)?

GVA measures the value a company creates by subtracting intermediate consumption (purchases of goods and services) from total revenue — it's the firm-level equivalent of GDP contribution.

What is the Solow Residual?

The Solow Residual is the portion of output growth that cannot be explained by growth in labour and capital inputs — it represents Total Factor Productivity growth, which is largely driven by intangible assets.

What is Total Factor Productivity (TFP)?

TFP measures the portion of output growth that cannot be explained by increases in labour or capital inputs — it captures the efficiency gains from innovation, technology, and better management.