Year-over-year performance is frequently used by investors seeking to gauge whether a company's financial performance is improving or worsening. For example, a business may report that its revenues have increased for the third quarter on a year-over-year basis for the last three years. This means that revenues at that company in the third quarter of year three were higher than revenues in the third quarter in year two, which were higher than revenues in the third quarter of year one.
As another example, a mutual fund that returned 50% last year may have a YOY return of 12%, as the year-over-year return takes into account each annual return since the fund's inception.
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