Compounded

Compounded is the past participle of the verb compound, meaning formed by combining two or more elements. It functions as an adjective or verb in several domains, indicating that a product, value, or substance results from deliberate combination rather than existing in a single component. The term derives from Latin componere, to put together.

In finance, compounded refers to interest that is earned on both the initial principal and on accumulated interest from prior periods. The effect of compounding grows with the frequency of application (for example, annually, semiannually, quarterly, monthly, or daily), leading to exponential growth over time. The standard formula for the future value with periodic compounding is A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is number of compounding periods per year, and t is time in years. Compounding can also apply to investment returns over multiple periods and to debt growth.

In pharmacology, compounded medications are tailor-made formulations prepared by pharmacists to meet individual patients’ needs. This may involve adjusting dosage, strength, flavor, or the route of administration when commercially available products are unsuitable or unavailable. Compounded drugs are prepared by licensed pharmacies under applicable regulatory and quality standards; oversight varies by jurisdiction and may emphasize safety, labeling, and sterility for certain products.

Other uses include general references to mixtures formed by combining components, such as materials or substances described as compounded. In everyday language, compounding emphasizes the intentional assembly of parts to create a new product or effect.

Etymology traces compounded to the Latin componere, “to put together.”