How to Calculate YoY Growth for 3 Years

Year-over-Year (YoY) growth is a fundamental metric used to track performance changes over time. It provides insights into trends, showing whether a metric like sales, profits, or website traffic is improving, declining, or stable. Businesses and individuals rely on YoY analysis to assess financial health and make informed decisions about future strategies.

Understanding Year-over-Year (YoY) Growth

Year-over-Year (YoY) growth involves comparing a specific data point from one period to the identical period in the previous year. This comparison helps neutralize the effects of seasonality, which can significantly distort shorter-term comparisons like month-over-month or quarter-over-quarter. For instance, comparing December sales this year to December sales last year offers a more accurate measure of performance change, free from typical seasonal fluctuations, unlike shorter-term comparisons that can be distorted by seasonality.

The basic formula for calculating YoY growth is straightforward: ((Current Period Value - Previous Period Value) / Previous Period Value) 100%. This calculation yields a percentage that indicates the rate of increase or decrease. To ensure the accuracy and reliability of YoY comparisons, use consistent data points, such as comparing full year to full year, or a specific quarter to the same quarter in the prior year, or even a specific month to the same month in the prior year. The data needed for these calculations typically comes from financial statements like income statements or balance sheets.

Step-by-Step Calculation for Multiple Years

Calculating Year-over-Year growth over several years provides a deeper understanding of long-term performance trends. To illustrate this, consider a business tracking its annual sales figures over four consecutive years: 2022, 2023, 2024, and 2025. Assume the annual sales data is as follows: $100,000 in 2022, $110,000 in 2023, $125,000 in 2024, and $130,000 in 2025.

First, to calculate the YoY growth from 2022 to 2023, use the sales from 2023 as the current period value and 2022 as the previous period value. The calculation is (($110,000 – $100,000) / $100,000) 100%, which results in a 10% growth rate. This indicates that sales increased by 10% from 2022 to 2023.

Next, for the growth from 2023 to 2024, the current period value is $125,000 (2024 sales) and the previous period value is $110,000 (2023 sales). Applying the formula, (($125,000 – $110,000) / $110,000) 100% equals approximately 13.64%. This shows a stronger growth rate in sales during this period.

Finally, to determine the YoY growth from 2024 to 2025, take the 2025 sales of $130,000 as the current value and 2024 sales of $125,000 as the previous value. The calculation is (($130,000 – $125,000) / $125,000) 100%, yielding a 4% growth rate. This process reveals the progression of performance over time.

Interpreting Your Growth Results

Once Year-over-Year growth percentages are calculated, interpreting them involves understanding what the numbers convey about performance change. A positive growth percentage indicates an improvement in the metric compared to the previous year, suggesting an increase in sales, profits, or other evaluated data. Conversely, a negative growth percentage signals a decline. Zero growth implies stagnation, where the value remained the same from one year to the next.

Analyzing these percentages across multiple years allows for the identification of trends. Accelerating growth occurs when the growth rate increases each year, while decelerating growth means the rate of increase is slowing down. Consistent growth indicates a relatively stable growth rate over the periods, whereas volatile growth shows significant fluctuations year-to-year. Understanding these patterns helps in assessing whether a company’s performance is gaining momentum, losing steam, or maintaining stability. These percentages are relative measures, providing context for the magnitude of change.