Companies, investors and others with an interest in a company often compare financial information from the same accounting period in two consecutive years to identify changes. This provides an apple-to-apples comparison of a company's growth or decline using the same information from the same time of year to avoid seasonal differences in a company's business. For example, you can calculate the change in revenue from the first quarter of one year to the first quarter of the next year. This is called the year-on-year, or year-over-year, change, which is expressed as a percentage.
Determine the amount of an item from an accounting period in year one and the same accounting period in year two for which you want to calculate the year-on-year change. Years one and two can be any two consecutive years. For example, calculate the year-on-year change in $500,000 in second-quarter revenue in year one to $650,000 in second-quarter revenue in year two.
Subtract the amount of the item in year one from the amount of the item in year two. For example, subtract $500,000 from $650,000, which equals $150,000.
Divide your result by the amount of the item in year one. For example, divide $150,000 by $500,000, which equals 0.3.
Move the decimal two places to the right in your result and round to the tenths place, if necessary, to express the result as a percentage. For example, convert 0.3 to 30 percent. This is the year-on-year change in second-quarter revenue, which means the company's revenue grew 30 percent year-on-year.
Tips & Warnings
- If the amount of an item declines between years one and two, your result will be a negative percentage.
- You can also calculate year-on-year change in a company's nonfinancial numbers, such as number of subscribers or number of employees.
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How to Calculate Year-Over-Year Variance
To calculate year-over-year variance, find the difference between this year's and last year's numbers and divide it by last year's numbers.