The value of business reports lies in how they present information clearly and concisely. If a report is unintelligible or too complex, it becomes difficult to draw useful insights to help you navigate your business.
That’s why a good report has to be simple and clear. It should give you clear insights not only into what’s going on with your business but also help you predict the future and make better decisions.
One way to do that is through comparison. When you measure the performance of one metric now and compare it against a different period, you can understand what direction your business is taking and act appropriately.
The most common time comparison metrics in business include the acronyms YTD, MTD, YoY, and MoM. Let’s go into detail about what each one means, how they are used in business, as well as examples of these reporting acronyms in action.
What does YTD mean in a dashboard?
When analyzing business trends, year-to-date (YTD) refers to the period from the first day of the current fiscal or calendar year to the current date. In most cases, the referenced year in YTD is the calendar year, which means the period begins from January 1 till now.
Most companies’ fiscal years (FY) also begin in January. If your organization uses a non-standard fiscal year, YTD might also reference the period between the beginning of the current fiscal year and the current date.
You do not actually include the current date in YTD reports as the business might not have closed at the time of preparation. YTD reports always end on the previous day.
How to Use YTD in Reporting
One of the most widely used metrics in business is YTD returns. It refers to the amount of profit or loss an investment or a company makes since the beginning of the current year. This information helps stakeholders understand how the investment or company is doing so far.
YTD returns can also be used to compare performance with a different year for the same time period. Analyzing current performance against historical data reveals what trends are taking place. It can also be used to compare the performance of competitors or peers.
YTD reports are extremely valuable time-related calculations since they are directly indicative of current performance.
Examples of YTD Uses in Reporting
YTD is used extensively in financial statements, marketing, and sales. It is also a key metric in investing, where it is used to show the returns from an investment or portfolio.
YTD revenues simply mean the total revenues collected so far. If by April you have figures of $55,450 for January, $87,690 for February, $50,460 for March, and $40,600 so far in April, your YTD results will be the sum of these revenues. That’s $234,200.
When calculating YTD returns for an investment, do the following:
- Subtract the value of the investment on the first day of the year (usually Jan. 1) from its current value
- Divide that difference by the first-day value
- Multiply by 100 to get percentage YTD returns.
For example, assume you have a stock that was worth $300,000 in January. By April, it is worth $450,000. The YTD performance of that stock is:
((current value -initial value) initial value) 100
((450000-300000) 300000)100=50% YTD
Your stock is up 50% since the beginning of the year. The same formula can also be used to calculate the YTD for sales, marketing campaigns, company costs, demand and supply, and many more.
YTD information is most useful when making strategic decisions during the year. That’s because it offers insights on a longer time period than other time-based metrics such as MTD.
What Is YoY in a dashboard?
Year-over-year (YoY) is a metric that refers to the 12-month change of a particular value and compares it to the change in a different period. In other words, it is the change in annualized returns between two comparable periods.
Year-over-year analysis is most commonly used when discussing financial or economic data, especially regarding growth. YoY data shows how a given variable increases or decreases from one year to the next.
While YTD shows the change in the interim period from the beginning of the year to the current date, YoY shows the relative change in a 12-month period compared to the previous year.
How to Use YoY in Reporting
YoY measures the rate of change between two variables over two different years. This makes it most useful when analyzing growth which can be a positive value, a negative value, or zero.
By nature, YoY comparisons favor cyclic events. That’s why YoY comparisons can also be made for quarterly, monthly, or annual performance. This is what makes this metric useful when you need to compare seasonal growth over two or more years.
For example, hotels that experience large spikes in occupancy during holidays can measure seasonal trends and use them to derive strategies for increasing reservations.
In another example, a company such as Spirit Halloween that sells costumes would expect most of its annual revenue between late August and early November. If the company wants to compare this season’s growth compared to last season, it will use YoY reports.
This information would help executives understand how revenue is growing from year to year, and not just for the current season. For it to be useful, year-over-year reporting should always compare performance with a similar time period.
There are two ways to calculate the YoY rate of change.
YoY growth=((current value of a variable)prior value)-1)100
Or,
YoY growth=((current value of a variable-previous value)previous value)100
Let’s say a seasonal e-commerce store sold $500 million in the 2019 holiday season and $750 million in the 2020 season. It’s YoY growth would be:
75000005000000-1=0.5
The store will have a YoY growth of 50%.
As you can see, YoY reporting gives a more global, stable view of company performance despite factors such as seasonality. It allows executives to be even more strategic and to make good decisions even in changing business environments.
What Is MTD in a dashboard?
Just like YTD, MTD (month-to-date) is a period that starts at the beginning of the current month to the current date. It is a much shorter period compared to YTD, but it is very useful in reporting interim monthly performance.
And, like YTD, MTD only covers the period ending at the last finalized business day. MTD is also sometimes referred to as month-till-date.
How to Use MTD in Reporting
Just like YTD, MTD performance is calculated by subtracting the initial value at the beginning of the current month from the current value, dividing it by the initial value, and multiplying by 100 to get a percentage.
((current value -initial value) initial value) 100
Assume a debt collection agency had collected $1.5 million by the beginning of August. On August 15th, the collected money was $2 million. The MTD as of August 15 would cover the period between August 1 and August 14 and is calculated as follows:
((2000000-1500000) 1500000)100=33.33% MTD
Since MTD is such a short period, some organizations also use previous month-to-date or PMTD. This covers the time since the time between the beginning of the previous month and the current date.
Both MTD and PMTD are useful in picking up and explaining quick trends in sales (sales pipeline metrics for example), marketing, financial, and any other business variables. They are most useful in businesses where keeping a handle on small daily and monthly changes is important.
Let’s say we are on the 17th of the month and you have 72 new leads. By the 20th of the previous month, you had 95 leads. You can already tell, thanks to MTD, that you probably won’t meet your sales and marketing objectives for that month unless you act quickly.
Businesses in the service industry also use MTD performance results extensively. Call centers, IT services, and marketing agencies all use MTD figures in performance reports to keep up with service-level agreements.
What Is MoM in a dashboard?
Just like YoY, month-over-month (MoM) is a metric that reflects growth. It is the smallest measurement of growth for a business that shows the increase or decrease in this month’s value of a certain variable as a percentage of the previous month.
How to Use MoM in Reporting
To find this percentage, you need to subtract the previous month’s value from this month’s value, divide the result by the previous month’s value, and multiply by 100. You can also divide the current month’s value by the previous value, subtract 1 from the result, and multiply by 100.
MoM growth=((this month’s value)(last month’s value)-1)100
Or,
MoM growth=((this month’s value-last month’s value)previous value)100
For example, assume a car dealership sold 30 cars in the whole of January. By the 28th of February, sales had soared to 50 cars for that month. The MoM growth would be:
5030-1=0.666667
When you convert to a percentage, you find that the dealership’s MoM growth was 66.67% as of February.
However, as you can tell, MoM results are highly volatile. That’s why organizations prefer to scale up to quarter-over-quarter (QoQ) and year-over-year (YoY) results.
Some businesses also use compound monthly growth rate (CMGR) to show growth over a given number of months. CMGR can also be used to predict likely performance over the next few months.
(value of last month in-range value of the first month in range)1/number of months-1
For example, if the dealership sold 30 cars in January and 48 in May, there is a 5-month interval. The CMGR would be:
(4830)1/5-1=0.0986
The dealership had a CMGR of 9.86%.
Due to the volatility of MoM figures, business owners and managers are advised not to make any long-term business decisions based on MoM information.
Despite that, MoM reporting is still very useful when reporting financial, marketing, and sales data because it helps businesses detect new trends and make adjustments.
For example, a slight decrease in sales for two months in a row could show the development of a new trend, prompting an investigation into the causes.
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