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Year Over Year Growth Calculator

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What is year-over-year?How to use the year-over-year calculatorThe importance of calculating year-over-year changesYear-over-year growth calculation example

A year-over-year growth calculator or YOY growth calculator is a powerful tool that can give you insights into the success of your business. The year-over-year tool calculates and compares the growth rate in a metric between one specific year and its previous year.

In this article, we will explore the definition of year-over-year, explain how to use the year-over-year growth formula, point out the benefits of calculating year-over-year changes, and finally look into a YOY growth calculation example.

What is year-over-year?

Year-over-year, also known as YOY or year-on-year, is a financial term and formula used to analyze and compare a particular metric from one specific year and its previous year. These calculations represent a trustworthy way to measure a business's performance by indicating an annual growth increase or decrease.

It is common for companies to identify their annual growth for specific metrics such as sales, expenses, revenue, and, most importantly, profit. Comparing one specific year to a prior year makes it easier to assess whether performance has increased and by how much.

This rate is essential for making informed decisions, setting future goals, and evaluating an organization's overall health and development.

🔎 Oftentimes, companies might also wish to look at more seasonal trends, one-off effects, or random changes from month to month. In other words, the difference between this month’s total and last month’s total. If you are looking for this type of analysis, it could be interesting to try the month over month calculator.

How to use the year-over-year calculator

To use the year-over-year growth calculator, follow the following three easy steps:

  1. Enter the value for the initial year.
  2. Enter the value for the final year.
  3. The year-on-year calculator will automatically display the percentage change (increase or decrease) between the initial and the final year.

⚠️ A percentage increase is represented as a positive value, whereas a percentage decrease is indicated as a negative one (for the latter, the year-over-year percentage change result is preceded by a minus sign).

In order to calculate the year-over-year growth, we use the following equation:

 ⁣YOY=final yearinitial yearinitial year×100\!\footnotesize \mathrm{YOY} = \frac{{\text{{final\ year}} - \text{{initial\ year}}}}{{\text{{initial\ year}}}} \times 100

To summarize, you are essentially:

  • Subtracting the value of the metric in the initial year from the value of that metric in the final year;
  • Dividing the result by the initial year metric; and then
  • Multiplying by 100 to get the annual growth rate.

It's that easy!

💡 Are you looking for tools that can give you insights into business success besides knowing what is your annual growth rate? Omni Calculator created the revenue growth calculator, the present value of growth opportunities calculator, and even the CAGR calculator for the purpose!

The importance of calculating year-over-year changes

The year-over-year growth percentage calculation is one of the most effective ways to study a business's performance. It can be beneficial for the following reasons:

  • It allows a higher level of accuracy when it comes to the financial health of seasonal business types.

  • It reflects if a company is coming up short, leveling up, or beating the previous year's growth.

  • It helps to predict future trends and impacts in higher-level decisions.

However, calculating the growth percentage year-over-year can also be interesting for people looking to invest in your company. Here's why:

  • It provides a crucial way to assess your business performance.

  • It shows the year-on-year financial performance fluctuation.

  • The results of this calculation are decisive in determining whether or not to go ahead with the investment.

Year-over-year growth calculation example

Let's assume you are looking to calculate your company's year-over-year revenue growth. Last year, in February, the company's revenue was evaluated to $80,000. This February, the company earned $100,000.

If we input those values into the calculator, here is what we get:

Year-over-year growth = (($100,000 – $80,000) / $80,000) × 100

Year-over-year growth = ($20,000/$80,000) × 100

Year-over-year growth = 25%

In other words, your company grew its monthly revenue by 25% year-over-year.

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