- What is Year-Over-Year (YOY) Growth?
- How to Calculate Year-Over-Year Growth?
- How to Calculate YOY Growth for 3 Years?
- How to Calculate Year-Over-Year Growth in Excel or Google Sheets?
- Year Over Year Growth Examples
Although you can get useful information from studying weekly or monthly figures, it’s important to get a longer and broader view of your business’ growth. A useful metric in this respect is year-over-year growth. Whether you’re looking at growth in terms of revenue, profit, production, or any other metric, year-on-year growth lets you assess actual growth without the effects of seasonality.
In this article, you will learn how to calculate year-over-year growth for different metrics. You will also learn to use Google Sheets to set up templates so you can speed up calculations and keep a record of all calculated values.
What is Year-Over-Year (YOY) Growth?
Year over year growth is a financial metric used to express the percentage of change between values a year apart. For example, you can calculate it using the total revenue values for two different years to get year-on-year growth for yearly revenue.
However, you can also calculate it using the monthly or quarterly values for those years. These values are often charted using different types of visualizations to facilitate analysis.
How to Calculate Year-Over-Year Growth?
To calculate year-over-year growth, you first need to select your chosen metric and gather values one year apart. Usually, monthly or quarterly values are used. Subtract the old value from the new one, then divide it by the old value and multiply by 100 to get the growth percentage.
What is the Formula for Year-Over-Year Growth?
Follow these steps to calculate YOY growth values.
- 1. Select the comparison periods.
- 2. Select the values for your chosen metric, which should be taken a year apart.
- 3. Subtract the old value from the new value and divide the result by the old value to get a decimal.
- 4. Multiply by 100 to get the percentage.
- 5. That’s it. You have your YOY percentage growth.
YOY growth = ((new value - old value) / old value) * 100
How to Calculate YOY Growth for 3 Years?
There are different ways to calculate yearly growth over a three-year period. If you have the values for all three years, you can calculate it using the previous formula. However, if you only have values two or three years apart, you can use the CAGR formula to estimate yearly growth.
CAGR = EV / BV ^ (1/n) – 1
- EV - The ending value.
- BV - The beginning value.
- n - The number of years.
To learn more about CAGR, take a look at this article on How To Calculate CAGR In Google Sheets.
Google Sheets is a great tool for performing financial calculations such as the compound annual growth rate. Here's how to calculate CAGR in Google Sheets.READ MORE
How to Calculate Year-Over-Year Growth in Excel or Google Sheets?
As you have seen, the calculation involved is simple; however, these calculations need to be carried out periodically. Ideally, you should keep track of these values to avoid having to recalculate to get a long-term view. Fortunately, tools like Excel or Google Sheets can help you set up templates to keep track of and automate the calculations. If you use templates for your financial statements, you can easily insert YOY growth calculations. However, you can also set them up as a separate template and import the values from the source file/s.
In the next section, you have examples of YOY growth calculations using Google Sheets.
Year Over Year Growth Examples
The following examples are based on the data for Company A. In the first example, I will calculate YOY revenue growth. In the second example, I will calculate YOY growth for multiple related metrics.
Example 1: YOY Growth for Single Metric
- 1. Select the timeframe you want to use. For this example, I will use December totals from 2020 and 2021.
- 2. Open two sets of parentheses and subtract the old value from the new value. Close the first set of parentheses.
- 3. Divide by the old value and close the second set of parentheses.
- 4. Multiply by 100 to get the percentage.
- 5. That’s it. The value for YOY growth for December values is 8%.
Excel GROWTH Function: How To Use and Examples
The Excel GROWTH function returns the predicted exponential growth for your data set. Here’s how to use the GROWTH function step-by-step, with examples.READ MORE
Example 2: YOY Growth for Multiple Metrics
Like in the previous example, I will use data for Company A, but I will include more metrics.
- 1. I will use December totals from 2020 and 2021 for the metrics shown below.
- 2. Just like in the previous example, I will add the formula for YOY growth using cell references.
- 3. Finally, I will drag down the formula to get the values for all the metrics.
Year-over-year growth is an important financial metric. Using YOY growth, you eliminate the effects of seasonality and fluctuations. Instead of comparing February values to January’s, you compare them to February's of the previous year. This gives you a useful comparison of values, and since it is expressed as a percentage, it’s also easy to compare with similar companies in the industry.
You now know about year-over-year growth and how to calculate it. You also know how to set up a quick template in Google Sheets to calculate year-on-year growth for your chosen metrics. As you have seen, it’s easy to calculate YOY growth using Google Sheets. The calculations are straightforward, but gathering the values for different metrics regularly can be tedious. Fortunately, using Layer, you can synchronize your data and link the values in your templates to different source files, as well as manage access and automatically share results. To learn more about other financial formulas related to growth, check out the articles below: