Revenue Growth (YOY)

Definition

Revenue growth ratio shows the rate a company's revenues have grown or declined over the last year.

Calculation

To calculate year over year revenue growth the following equation applies.

Revenue Growth = (Current Year Revenue - Previous Year Revenue) / Previous year revenue

Let's calculate revenue growth for Company A, who has a a current revenue of $200 and a previous year revenue of $150.

($200 - $150)/$150 = 33.33% Revenue Growth. This means that Company A has increased its revenues by 33.33% compared to last years revenue.

Why it's important

The revenue growth rate helps investors understand how much a company's revenues have increased or declined over the last year.

Financial Glossary Reference

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