GEOMEAN

The GEOMEAN function calculates the geometric mean of a set of numbers. It is particularly useful in situations where you need to find the average growth rate of values over time.

Syntax

=GEOMEAN(number1, [number2], [number3], ...)

number1 The first number or range containing the values for which you want to calculate the geometric mean.
number2 (Optional) Additional numbers or ranges of values for which you want to calculate the geometric mean. Up to 255 arguments can be provided.

About GEOMEAN

When you're dealing with data that involves growth rates or ratios, the GEOMEAN function in Excel comes to the rescue. It assists you in finding the average growth rate of a set of numbers, offering insight into how values have evolved over time in a compounding manner. Whether you're working with financial data, scientific measurements, or any dataset requiring a geometric perspective, GEOMEAN proves to be a valuable ally in your analytical endeavors. By providing a precise calculation of the geometric mean, this function aids in understanding the compounded growth or shrinkage of values across a dataset, offering a comprehensive view of the overall trend.

Examples

Suppose you have a dataset of values representing the growth rates of an investment over four periods: 10%, 5%, -3%, and 8%. To calculate the geometric mean for these values, use the formula: =GEOMEAN(1.1, 1.05, 0.97, 1.08). This will yield the average growth rate across the periods.

Consider a scenario where you have sales data for a product showing growth rates of 20%, 15%, and 25% in consecutive quarters. To determine the average quarterly growth rate using the geometric mean, input the formula: =GEOMEAN(1.2, 1.15, 1.25). This computation reveals the overall average growth rate for the product over the specified periods.

Questions

How does the GEOMEAN function differ from the AVERAGE function?

While the AVERAGE function calculates the arithmetic mean by summing values and dividing by the count, the GEOMEAN function computes the geometric mean by multiplying values and taking the nth root, where n is the count of values. The GEOMEAN function is suited for calculating average growth rates over multiple periods.

Can the GEOMEAN function handle negative values?

No, the GEOMEAN function works with positive values only. Providing negative values can lead to incorrect results, as the concept of geometric mean involves multiplying values together. Ensure all input values for the GEOMEAN function are positive.

In what scenarios can the GEOMEAN function be beneficial?

The GEOMEAN function is particularly valuable when analyzing datasets involving growth rates, ratios, or any situation where compounded change over time needs to be evaluated. It is commonly used in finance, biology, and other fields where understanding the average relative growth or decay is crucial.

Related functions

AVERAGE
MEDIAN
MODE
PRODUCT
LOGEST
GROWTH