Calculating YoY How to calculate YoY (year on year or year over year) will be discussed in this one article. Year over year (YoY) growth stands for annual growth rate. Compare statistics for the same period and period of the previous year and calculate the percentage change over 12 months.
Year-on-Year or commonly abbreviated as YOY is a systematic term in the financial world to compare one year’s data with the previous year’s data. This term is often found in the financial statements of public companies whose shares have gone public or are known as IPOs.
On the other hand, YOY can also be interpreted as a financial analysis method that allows business owners to monitor and evaluate the performance of their company over a certain period of time. This analysis is usually carried out to compare the growth rate or sales growth between the current year and the previous year.
This calculation also allows traders to evaluate various aspects of their business growth. Then, how do you calculate the correct YoY?
Tips for Calculating YoY
Citing various sources, here is the review:
1. Select the period or month to compare
Before performing year-over-year (YoY) calculations, you must select a comparison period. For example choosing the period of the third quarter of this year and the third quarter of the previous year. You can also use a different period, but still in the same time period.
2. Gather the necessary information
Next, you need to collect data to create an annual invoice. If you want to calculate a comparison between this year and last year, look for data from 2022 and 2021. This data contains financial data and other information needed to compare the two periods.
3. Subtract the previous number
After collecting data from the previous year, try subtracting this year’s number to find the growth rate. For example, if your company was able to sell 2,000 products this year and only 1,000 last year, then the calculation is 2,000-1,000 and the result is 1,000.
4. Divide the total by the previous year’s figure
Then divide the total by the previous year’s figure, namely 1,000 : 1,000 = 1.
5. Calculate the final percentage
Well, the results of these calculations must then be converted into a percentage. You can do this by multiplying the number by 100. So 1 × 100 = 100%. That means your sales growth has shot up to 100% this year.
6. Run the analysis of the results
Finally, you must first analyze the results of the annual census. Is it increasing, decreasing or stopping. If the results are positive, it means that your business growth has increased. Conversely, if the bottom line shows a negative number, it means that your business growth is reduced/disappeared, so it needs further evaluation and improvement.