I have a question regarding Year-Over-Year (YOY) as I am really confused right now. Why is YOY important?
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20This is a really broad question. What is the specific place where you are seeing this term, and what are you trying to learn about? – Grade 'Eh' Bacon Nov 08 '22 at 16:03
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1This may be a American=English vs British-English difference, but I usually hear it as "Year on Year" (also abbreviated YoY). – Martin Bonner supports Monica Nov 09 '22 at 06:36
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4Why do you think it might not be important? What would you look at instead? – NotThatGuy Nov 09 '22 at 15:57
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"Year over year" what? The term describes a method of comparison. It is just as important to know what quantity is being compared from one year to the next. – Karl Knechtel Nov 11 '22 at 23:43
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Many business and economic metrics are seasonal - for example, many retailers make the majority of their revenue in the fourth quarter due to holiday sales. Many business make the majority of their revenue in summer months, or winter months (e.g. ski resorts).
So comparing one quarter or month to just the previous one is not always informative. It's often more informative to compare metrics to the same period in the prior year, to make sure that growth and other changes are not due to seasonality.
D Stanley
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2Just think about what it tells you that ski sales are up from June. The answer is: it tells you nothing. – Jörg W Mittag Nov 11 '22 at 01:17
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1"Same period in the prior year" is often tricky, since weekends and public holidays often change dates between years and can have a big influence on sales. E.G. The same month can have 4 or 5 weekends in different years, which is 25% difference if your sales mostly happens on weekends. – Falco Nov 11 '22 at 13:11
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As Year-Over-Year(YOY) can compare each metrics that repeat on annual, quarterly, or monthly basis across the company's reporting requirements. One of the major reason when analyzing performance in any category. Moreover, it also offers an objective view of overall performance.
There are many reasons to consider YOY, some of them include, show you what works and what does not, assist you in obtaining investments, put seasonality in the proper context, supports you in identifying errors, and much more.
Heena Kousar
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