Table 6From “What is growth accounting? Separate new, retained, expanded, and lost revenue”
How should growth accounting be interpreted?
Table 6How should growth accounting be interpreted?
| Bridge signal | Reading allowed | Next inspection | Interpretation not allowed |
|---|---|---|---|
| Beginning and ending bases reconcile | The declared components sum to the ending base. | Scope, currency, and period. | That growth is healthy. |
| New revenue is positive | Units outside the beginning base added revenue. | Eligibility, acquisition source, and timing. | That acquisition is efficient or causal. |
| Expansion is positive | Beginning-base units have a higher ending amount. | Price, seats, usage, mix, and margin. | That customers are satisfied. |
| Contraction or churn is positive | Beginning-base value was reduced or lost. | Effective event, reason, and customer count. | That one owner caused the loss. |
| Residual is present | A declared movement remains outside named components. | Residual definition and stability. | That the bridge is fully explained. |
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From the essay
Growth that compounds
What is growth accounting? Separate new, retained, expanded, and lost revenue
Growth accounting reconciles recurring revenue through new, expanded, contracted, and lost components. Keep revenue and customer counts separate.
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