How to Calculate Year-over-Year (YoY) Percentage

Year-over-Year (YoY) percentage is a widely used metric for evaluating change in a specific data point over a twelve-month period. It is a straightforward method for comparing performance across different years. This comparison is useful in business and finance for understanding whether a company or an economic indicator is growing, declining, or remaining stable.

Understanding Year-over-Year Growth

YoY compares a metric’s performance during a specific period against the same period in the previous year. This approach neutralizes the impact of seasonality, which can significantly influence monthly or quarterly data. For instance, a retail business might naturally see higher sales in December due to holiday shopping. Comparing December sales of one year to December sales of the prior year provides a more accurate picture of growth than comparing December to November.

To perform a YoY calculation, two essential data points are required: the value for the current period and the value from the comparable prior period. This direct comparison allows for insights into long-term trends and overall business health.

Formula for Calculation

The formula for calculating Year-over-Year percentage quantifies change: ((Current Period Value - Prior Period Value) / Prior Period Value) 100.

Each component of this formula plays a distinct role. The “Current Period Value” represents the data point for the most recent period being examined. The “Prior Period Value” refers to the data point for the corresponding period from the previous year. Subtracting the prior value from the current value determines the absolute change, while dividing this difference by the prior value normalizes the change relative to the starting point. Multiplying the result by 100 converts the decimal into a percentage, making it easily interpretable as a growth or decline rate.

Applying the Formula with Examples

Real-world scenarios illustrate the practical use of the Year-over-Year formula in financial analysis. Consider a business that reported sales revenue of $500,000 in 2023 and $600,000 in 2024. To calculate the YoY sales growth, subtract the prior year’s sales ($500,000) from the current year’s sales ($600,000), resulting in a $100,000 increase. Dividing this increase by the prior year’s sales ($100,000 / $500,000 = 0.20) and then multiplying by 100 yields a 20% Year-over-Year sales growth.

If a company’s operating expenses were $200,000 in 2023 and $210,000 in 2024, the calculation for YoY expense growth involves subtracting $200,000 from $210,000 ($10,000). Dividing $10,000 by $200,000 results in 0.05, and multiplying by 100 gives a 5% Year-over-Year increase in expenses.

If a business had 1,000 website visitors in July 2023 but only 900 in July 2024, this represents a decline. The calculation would be (($900 – $1,000) / $1,000) 100, which equals (-$100 / $1,000) 100, resulting in -10%. These examples demonstrate how the same formula quantifies both positive and negative changes across various financial and operational metrics.

Interpreting Your Results

Interpreting the calculated Year-over-Year percentage provides insights into performance trends. A positive percentage indicates growth, meaning the metric increased compared to the prior year. For example, a 15% YoY revenue growth suggests the company generated 15% more revenue this year than last.

Conversely, a negative percentage signifies a decline, showing the metric decreased from the previous year. A -5% YoY profit indicates profits were 5% lower this year. A zero percentage means there was no change between the two periods. The magnitude of the percentage also matters; a 20% growth reflects a more significant improvement than a 2% growth. These figures help in understanding underlying trends and support informed decision-making.