Year Over Year (YoY)
What is Year Over Year (YoY)?
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 Does Year Over Year (YoY) Work?
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 Does Year Over Year (YoY) Matter?
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.
