YOY Full Form | Full Form of YOY
YOY Full Form - Year-Over-Year
Year Over Year
- Year-over-year (YOY) is a frequently used financial comparison for comparing two or more measurable events on an annualized basis.
- Looking at YOY performance allows for gauging if a company's financial performance is improving, static, or worsening. For example, in financial reports, you'll read that a specific business reported its revenues increased for the third quarter, on a YOY basis, for the last three years.
Understanding year-over-year (YOY)
- YOY comparisons are a well-liked and effective way to evaluate the financial performance of a corporation and therefore the performance of investments. Any measurable event that repeats annually is compared on a yoy basis. Common yoy comparisons include annual, quarterly, and monthly performance.
- Year-over-year (YOY) is a method of evaluating two or more measured events to match the results at one period with those of a comparable period on an annualized basis.
- YOY comparisons are a well-liked and effective way to evaluate the financial performance of a corporation.
- Investors seeking to measure a company's financial performance use YOY reporting.
Benefits of year-over-year (YOY)
- YOY measurements facilitate the cross-comparison of sets of knowledge. For a company's first-quarter revenue using YOY data, a securities analyst or investor can compare years of first-quarter revenue data and quickly ascertain whether a company’s revenue is increasing or decreasing.
- For example, within the third quarter of 2017, barrick gold corporation reported a net loss of $11 million, year-over-year.
- Further, the corporate reported net earnings of $175 million within the third quarter of 2016, which showed a decrease in barrick gold’s earnings from comparable, annual periods.1 this YOY comparison is additionally valuable for investment portfolios. Investors wish to examine YOY performance to see how performance changes across time.
Reasoning behind year-over-year (YOY)
- YOY comparisons are popular when analyzing a company's performance because they help mitigate seasonality, an element which will influence most businesses. Sales, profits, and other financial metrics change during different periods of the year because most lines of business have a high season and a coffee demand season.
- For example, retailers have a peak demand season during the holiday shopping season, which falls within the fourth quarter of the year. To properly quantify a company's performance, it makes sense to match revenue and profits year-over-year.
- It's important to match the fourth-quarter performance in one year to the fourth-quarter performance in other years.
- If an investor looks at a retailer's leads to the fourth quarter versus the prior third quarter, it'd appear a corporation is undergoing unprecedented growth when it's seasonality that's influencing the difference within the results.
- Similarly, during a comparison of the fourth quarter to the subsequent half-moon, there might appear a dramatic decline when this might even be results of seasonality.
- YOY also differs from the term "sequential," which measures one quarter or month to the previous one and allows investors to see linear growth.
- As an example, the amount of cell phones a tech company sold within the fourth quarter compared to the third quarter, or the number of seats an airline filled in January compared to December.