For example, consider a profit/(loss) of ($50M) in year 1 that becomes a profit/(loss) of only ($1M) in year 4. If we apply the traditional formulas for Percent Change and Compound Annual Growth Rate (CAGR), we find that the results do not align with common-sense interpretation. Beginning with % Change, the usual formula is: , plugging in our example values: Common-sense says our profit is increasing, therefore we expect +98%.