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I have a question regarding Year-Over-Year (YOY) as I am really confused right now. Why is YOY important?

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    This 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 8, 2022 at 16:03
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    This 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 9, 2022 at 6:36
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    Why do you think it might not be important? What would you look at instead?
    – NotThatGuy
    Nov 9, 2022 at 15:57
  • "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, 2022 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.

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    Just 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, 2022 at 1:17
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    "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, 2022 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.

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