Investing in Philippines: Investing word of the day: YoY or Year on Year


Friday, August 12, 2011

Investing word of the day: YoY or Year on Year

Year on Year or sometimes Year over Year is a terminology that means a comparison of the current year against last year.

Let us use the data below for a simple analysis of a company's performance.

To compute YoY ratios we follow this simple formula(remember to click your "%" in your Microsoft Excel to express the value below in percentage:

Now base on the above information Sales of the company have grown or risen 10% year on year while Cost of Goods Sold(COGS) have also risen into a whopping 44.44% as compared last year.

Though there was a 10% increase in Sales the big 44.44% increase in COGS contributed to the decrease of Gross Profit by 18.18%. A decrease in Expenses by 20% as compared to last year curbed the big chunk of decrease caused by the increase in COGS but not enough to eliminate such impact bringing the Net profit decrease to only 16.67% as compared to last year.


Too technical?

It only means that the decrease of Net profit was  due to  big increase of cost of sales but thank goodness a decrease in expenses lessened the impact of such increase.


No comments: