What It Is:
In the business world, a year is a 12-month period, four-quarter period, or 13-period stretch of time. It is not always 365 days long, though it is usually very close to that. In business,
How It Works/Example:
Years are important because they create time frames for comparing information. For example, let's assume Company XYZ's fiscal year began on January 1 and that today is March 31. During this time, Company XYZ recorded the following:
By comparing the 2012 revenues with the 2011 revenues, we can calculate that Company XYZ was up 50% year over year.
Why It Matters:
Yearly information is useful in looking for trends or measuring performance against goals. Remember, though that comparing year-over-year information among companies with different fiscal-year start dates can distort an analysis: The time included may vary and seasonal factors may become skewed. It is also important to remember that the extra day in leap years may also distort comparisons.