45.00% is the example result. Read it using the units and relationship stated below.
Rule of 40 uses revenue growth (%), profit margin (%).
Comparing financial amounts on a defined basis
For rule of 40, the relationship is Result = [Revenue growth (%)] + [Profit margin (%)]. The amount depends on the supplied revenue growth (%), profit margin (%), rather than a live market price or a value imported from another record. A financial model is useful when its cash amounts, rate convention and time horizon describe the same case. Interest, return and purchasing power are different outputs. A projection should remain separate from an observed or audited balance.
What the model includes
Result = [Revenue growth (%)] + [Profit margin (%)] Check whether a rate is annual, monthly, simple or compounded. Enter fees only where the form represents them and identify contractual charges that remain outside the estimate. A monthly payment alone does not establish affordability or total ownership cost. Use the result to prepare the next question about terms or assumptions. Tax treatment, lender conditions and valuation evidence require the relevant source documents; they cannot be recovered from a few numeric inputs.
Example with the supplied inputs
Revenue growth (%): 30; Profit margin (%): 15. Result: 45.00%. The values are illustrative.
Compare one changed input
Revenue growth (%) changes from 30 to 33. The result becomes 48.00%. All other inputs remain fixed.
Calculation rule
Result = [Revenue growth (%)] + [Profit margin (%)]
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Revenue growth (%) | 30 | Enter revenue growth (%) on the percentage scale used in the formula (20 means 20%, not 0.20). Keep its base and reporting period consistent with the other inputs. |
| Profit margin (%) | 15 | Enter profit margin (%) on the percentage scale used in the formula (20 means 20%, not 0.20). Keep its base and reporting period consistent with the other inputs. |
Output: 45.00% is the example result. Read it using the units and relationship stated below. Use the formula to distinguish a cash amount, count, percentage or ratio.
How to use the page
Collect the inputs
Gather Revenue growth (%), Profit margin (%). Use one period and the units shown in the form.
Run the calculation
Enter the values and select the action. The calculation rule above explains how the inputs produce the result.
Compare a scenario
Change Revenue growth (%) on its own, keeping the other inputs fixed. Read both results before changing another assumption.
Worked example
With the example inputs listed above, the result is 45.00%.
Change Revenue growth (%) from 30 to 33 while keeping every other value fixed. The result becomes 48.00%. This comparison isolates that input; it does not forecast how other variables will respond.
Check the stated formula, units and limits before using the result in a decision.
Keep the displayed formula, input units and model scope with the result. Corrections or questions can be sent through the request section on this page.
Content updated: October 11, 2026