Growth Margin Rule
Screen combined growth and profit margin against a caller-selected rule-of-40 target.
Description
A growth-plus-margin screen combines revenue growth and profitability.
A growth-plus-margin screen combines revenue growth and profitability. The target and profit-margin definition must be chosen consistently for the comparison.
Screen combined growth and profit margin against a caller-selected rule-of-40 target.
When to use Growth Margin Rule
Use this for the following task: Screen combined growth and profit margin against a caller-selected rule-of-40 target.
Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.
How to use Growth Margin Rule and understand its results
- Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.
- Enter revenueGrowthPercent, profitMarginPercent, minimumCombinedPercent using the field table, then run the tool.
- Read combinedPercent, marginToTargetPoints, passes. Interpret flags, units, ordering and placeholder values using the rules below.
- Review any reported issue or failed check, correct the supplied values when appropriate, and verify the result in its intended context.
| Input field | Meaning | Value type and bounds | Requirement |
|---|---|---|---|
| revenueGrowthPercent | Revenue growth percent | number | Required |
| profitMarginPercent | Profit margin percent | number | Required |
| minimumCombinedPercent | Minimum combined percent | number | Required |
Supply signed percentages and a target percentage. Add the two components and pass when the sum meets the target inclusively.1
combined=growthPercent+marginPercent; marginToTarget=combined−minimumCombinedPercent This summarizes the declared operation. Units, indexing, inclusivity and exceptional cases are explained in the surrounding text.
| Output field | Meaning | Value type |
|---|---|---|
| combinedPercent | Combined percent | number |
| marginToTargetPoints | Margin to target points | number |
| passes | Passes | boolean |
{
"input": {
"revenueGrowthPercent": 25,
"profitMarginPercent": 20,
"minimumCombinedPercent": 40
},
"output": {
"combinedPercent": 45,
"marginToTargetPoints": 5,
"passes": true
}
}Limitations and assumptions
Inputs use percent units, so 40 means 40 percent. The tool does not enforce a fixed rule-of-40 target or judge valuation.
These outputs describe the supplied scenario; accounting definitions, capitalization terms and time periods must match the intended use. Malformed requests produce input errors. A successfully evaluated request can still contain false flags, empty result lists or a result outside the supplied threshold; those outcomes have the meanings stated above.
Alternative or Complementary methods
Choose Monthly Growth Comparison for this operation: Compare arithmetic mean monthly growth with compounded average growth. For a complementary task, use ARR Burn Multiple for this operation: Compute cash burned per unit of net new ARR over a consistently measured period.
The implementation reference documents the exact calculation, supported input shapes and returned fields.
References
-
Growth Margin Rule — tool.io
Similar or alternative tools
- Monthly Growth Comparison
Compare arithmetic mean monthly growth with compounded average growth.
- ARR Burn Multiple
Compute cash burned per unit of net new ARR over a consistently measured period.