When looking at your company’s monthly metrics, it’s essential to focus on a month’s worth of data. Realizing a 50% increase in sales can be encouraging, but looking at these numbers separately doesn’t necessarily provide a full picture of your business performance. A month’s metrics is worthwhile, but it can be misleading if not placed in the proper context. So, how can you measure your work on a larger scale? One of the better indicators you can use is year-over-year growth.

YoY growth can eliminate factors that can skew your data by comparing your monthly figures to a larger sample and comparable period. To understand how to calculate YoY Growth, it would be nice first to develop a clearer idea of ​​YoY Growth’s definition.

1.What is Year-Over-Year Growth?

Year-over-year (YOY) growth is a solution that compares one period with the same period from the previous year(s). It shows the rate of increase or decrease of a specific month or quarter this year compared to the previous year’s same period. 

Unlike single-month indicators, YOY growth helps you get a clearer picture of real success over time by removing seasonal effects, monthly volatility, and other factors. This can help them understand how successful your company is so far and how successful it can be in the upcoming years.

2. Why does YOY Growth Matter?

Automatically negate the effect of seasonality

Since a company’s performance can vary from month to month, looking at monthly performance can lead to instability even if it performs well during the season. As you grow from year to year, comparing specific months or quarters can refine your statistics and make them appear more reliable to investors.

Simple to track and calculate

Most business data can be tracked by business data software, such as Excel or FineReport. And YoY growth is achieved through simple calculations.

To better understand your business at a top-level

Through year-over-year growth, you will have a full picture of your business performance. This can help you better understand where your company is and what improvements you can make.

3.Year-Over-Year Growth Formula

Below is the formula you’ll use to calculate year-over-year growth. 

(Current Year Data — Last Year’s Data) / Last Year’s Data x 100

The formula is simple; all you need is to subtract your current year’s data by last year’s data and then divide it by last year’s data. Then, you multiply the resulting number by 100, which provides you with a percentage figure.

4.How to Calculate YOY Growth

4.1 Determine the timeframe you’d like to compare

Before you begin your equation, you need to decide the periods you want to compare. You can calculate YOY growth between two different months, quarters, or even years. But by using smaller time periods, like months, you can help mitigate seasonality issues. 

4.2 Collect the data during this period

The next step is to collect the data you need during the timeframe you chose. 

For example, let’s say that you want to compare your previous quarter with last year’s in the sales report.

To calculate YoY growth, you need to collect quarterly sales data and the same data from the period recorded 12 months ago.

However, the company usually has multiple business systems, and these data are scattered in different branches and business systems. Therefore, integrating data is often the first problem you need to handle in data collection. If your information is stored in Excel, the calculations can be time-consuming and complicated. 

And if data is entered redundantly or data between systems is not synchronized, data consistency and accuracy will also be a concern. 

Instead, professional reporting software can easily solve this challenge. For example, FineReport supports integrating data from different systems such as ERP/OA/MES into a single platform and allows you to extract and combine data from different databases and tables, which solves the isolated island of information in the organization.

4.3 Use the year-over-year growth formula

Once the data collection is complete, using the formula above, year-over-year growth can be easily calculated. 

But what if there’s a lot of data to count？

In this situation, you can still take advantage of reporting software. 

We will explain the YoY growth calculation using the reporting tool through a real example.

The sample below is a statistical report that includes YoY growth built by FineReport. 

The operation is easy. 

As in the excel, you enter the formula first. And then drag the dataset to the corresponding cell.

 A simple report includes the MoM, YoY, Proportion, is done in a few minutes. 

5.Conclusion

Year-Over-Year Growth gives you a clearer picture of real success over time without the effect of seasonality. We often see the YoY growth exist as a key indicator in business performance dashboards. The formula is easy to master, but it will be much more effective if you calculate the YoY Growth with reporting software such as FineReport. 

FineReport is free for personal use. Welcome to take advantage of it!

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