Definition of Growth YoY
- The YoY growth looks at a company’s performance/profit year after year or period after period.
- The YoY compares the performance/profit and looks at how well the company is doing.
- The growth YoY is essential to investors as it allows them to see whether or not the business is worth investing in.
What is the Formula for Growth YoY?
[(This Year – Last Year) ÷ Last Year] x 100
- You can use this formula for anything you would like to measure.
- For example, you can check the growth rate of revenue by plugging in this year’s revenue and subtracting it by last year’s revenue, dividing it by last year’s revenue, and then multiplying it by 100.
- Similarly, you can compare the growth rate in the number of customers you have by totaling this year’s number of customers and subtracting it by last year’s customers, last year’s customers, and then multiplying it by 100.
Growth YoY in Practice
- Frank has a subway stall and sold 400,000 sandwiches in the second year of his business. He currently sells 600,000 sandwiches a year. What is the growth YoY for Frank’s subway stall?
- 600,000 – 400,000 = 200,000
- 200,000 ÷ 400,000 = 0.5
- 0.5 x 100 = 50%
- Therefore the growth rate for the number of sandwiches Frank sells is 50%.