HOW TO DO AYEAR-OVER-YEARFINANCIAL ANALYSISToo many buyers acquire websites and online business’s on ‘gut feelings’. This presentation will show just one simple tool you can use to buy smarter.

What is Year over Year Analysis?

Most buyers look at the monthly financial trends of an online business.

A Year over Year analysis compares two years with similar months.

Why Do Year over Year Analysis?

• Gives a better sense of overall trends

• Neutralizes Seasonal Fluctuations

• Better identifies cause/effect of changes in business

• Creates a better baseline growth figure for projections

What Should You Analyze?Anything can be analyzed, but revenue and cash flow are the most common starting points.

What Should You Analyze?• Gross Revenue Trends• Owner’s Earning Trends• Revenue to Earnings Trends• Gross Profits• Gross Profit Margins

• Total Expense Profile• Trend of an individual expense• Trend of an individual expense to revenues• Just two years of financials• Multiple years of financial data

How to Setup a YoY AnalysisYou can orient your table vertically or horizontally. This example will use a vertical orientation.

Transpose Values Into Their Cells

This step is a bit tedious, but necessary.

Calculate the Year over Year Change

• Add a new column called “% Change”• Make that column = (this year - last year)/last year• Format the cells to %• Copy this for all of the cells in that column.

Now You Can Visualize DataWhat initially looks like a company that is growing is

obviously a company whose growth is stalling.

To Learn MoreThis presentation is part of a larger article on how to use financial trend analysis to buy an online business.

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