Year-Over-Year (YOY): Meaning, Benefits & Example: Hi, Everyone Today I am going to share some interesting information on the topic of Year-Over-Year (YOY): Meaning, Benefits & Example.
What Is Year-Over-Year (YOY)?
Year-Over-Year that is Year Over Year is an often-used financial comparison. For comparing two or more measurable events on an annualized basis.
Looking at Year Over Year performance allows for an estimate. If a company’s financial performance is improving, static, or worsening. For example, in the financial reports, one may read that a particular business reported its revenues increased for the third quarter. On a Year Over Year basis, for the last three years.
Understanding Year-Over-Year (YOY)
Year Over Year comparisons is popular. It is also an effective way to evaluate the financial performance of a company. The performance of investments. Any measurable event that repeats annually can be compared on a Year Over Year basis. The Common Year Over Year comparisons is included annual, quarterly, and monthly performance.
The Benefits of Year-Over-Year (YOY)
The Year Over Year measurements make easier the cross-comparison of sets of data. For a company’s first-quarter revenue using the Year Over Year data. A financial analyst or investor can compare the years of first-quarter revenue data. They quickly make sure of whether a company’s revenue is increasing or decreasing.
For example, in the third quarter of 2017. Barrick Gold Corporation reported a net loss of $11 million, year-over-year. Further, the company reported net earnings of around $175 million in the third quarter of the year 2016. It showed a decrease in Barrick Gold’s earnings from comparable, and annual periods.
This Year Over Year comparison is also valuable for the investment portfolios. Investors like to examine Year Over Year performance to see how the performance changes across time. Reasoning Behind Year-over-Year that is YOY.
The Year Over Year comparisons is popular when analyzing a company’s performance. Because they help to make seasonality. A factor that can influence most businesses. The Sales, profits, and other financial metrics have changed during different periods of the year. Because most lines of business have a peak season and have a low demand season.
For example, retailers have a peak demand season during the holiday shopping season. It falls in the fourth quarter of the year. To properly quantify a company’s performance. It makes sense to compare the revenue and profits year-over-year.
It is important to compare the fourth-quarter performance in one year. To the fourth-quarter performance in other years. If an investor looks at a retailer’s results in the fourth quarter versus the earlier third quarter. It might appear a company is undergoing known before growth. When it is seasonality that is influencing the difference in the results.
Similarly, in a comparison of the fourth quarter to the following first quarter. There might appear a dramatic decline. When this could also be a result of seasonality.
Year Over Year also differs from the term sequential. It measures one quarter or month to the previous one. Allows investors to see the linear growth. For example, the number of cell phones a tech company sold in the fourth quarter. This compared to the third quarter or the number of seats an airline filled in the month of January compared to the month of December.
In the year 2019 NASDAQ report, Kellogg Company released mixed results for the fourth quarter of the year 2018. Revealing that its year-over-year earnings continue to decline. Even while sales have increased on the following corporate assets. Kellogg guessed that adjusted earnings will drop by a further 5% to 7% in the year 2019. As it continues to invest in the alternate channels and also pack formats.
The company has also opened on the plans to reorganize its North America and Asia-Pacific segments. Removing several divisions from its North America segment. The reorganizing its Asia-Pacific segment into Kellogg Asia, Middle East, and Africa. Despite decreasing year-over-year earnings. However, the company’s solid presence and responsiveness to consumer consumption trends. It means that Kellogg’s overall outlook is favorable.
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So, this is the important information on the topic of Year-Over-Year (YOY). Here I have mentioned the full description and importance of Year over Year.
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