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Year Over Year Growth Formula:
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Year Over Year (YoY) revenue growth is a key financial metric that compares a company's revenue from one period (usually a year) to the same period in the previous year. It measures the rate of growth or decline in revenue over a 12-month period.
The calculator uses the YoY growth formula:
Where:
Explanation: This formula calculates the percentage change in revenue from one year to the next, providing a clear picture of business growth or decline.
Details: YoY growth is crucial for assessing business performance, making strategic decisions, attracting investors, and benchmarking against industry competitors. It eliminates seasonal fluctuations and provides a more accurate growth picture than month-to-month comparisons.
Tips: Enter current revenue and previous revenue in the same currency units. Ensure previous revenue is greater than zero for valid calculation. The result shows percentage growth (positive for growth, negative for decline).
Q1: What is considered good YoY revenue growth?
A: Good growth varies by industry, but generally 10-20% annual growth is considered healthy for established companies, while startups may target higher rates.
Q2: How does YoY differ from quarter-over-quarter (QoQ)?
A: YoY compares the same period across different years, eliminating seasonal effects, while QoQ compares consecutive quarters and may be affected by seasonality.
Q3: Can YoY growth be negative?
A: Yes, negative YoY growth indicates revenue decline compared to the previous year, which may signal business challenges or market conditions.
Q4: Should revenue be adjusted for inflation?
A: For accurate real growth assessment, it's recommended to use inflation-adjusted revenue figures, especially in high-inflation environments.
Q5: What factors can affect YoY revenue growth?
A: Market conditions, competition, product launches, pricing changes, economic cycles, and company-specific strategies all influence YoY growth rates.