Year Over Year (YoY)
What it is:
Year over year refers to the mathematical process of comparing one year of data to the previous year of data. In business, note that a fiscal year does not always go from January 1 to December 31; many companies have fiscal years beginning at other times.
How it works (Example):
Let's assume Company XYZ's fiscal year began on January 1 and that today is March 31. During this time, Company XYZ recorded the following:
By comparing the 2012 revenues to the 2011 revenues, we can calculate that Company XYZ was up 50% year over year.
Why it Matters:
Year-over-year information is useful in looking for trends or measuring performance against goals.
It's important to remember that comparing year-over-year information among companies with different fiscal-year start dates can distort an analysis; the time included may vary and seasonal factors may become skewed. It is also important to remember that the extra day in leap years also can distort comparisons.
