Quarter on Quarter (QOQ) – Overview, Uses, Examples are discussed in this article. You will find it quite informative.

Quarter on quarter QOQ overview uses examples

Overview of Quarter on Quarter (QOQ)

The proportional relationship between the periodical publication data appears four times per year or Once every quarter year like three months.

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QOQ is used in financial or accounting principles for any quarter is a consecutive prediction. Systematically, the first quarter is referred to (Q1) refers which consists of three months January, February, and March.

Also, Q2 represents ranges from April to June, Q3 ranges from July to September, and Q4 ranges from October to December. Every year is analyzed in three months intervals using Q1, Q2, Q3, and Q4.

The QOQ is a measure mostly used in to ascertain definitely in figuring out a company’s quarterly incremental value. In economists, the QOQ is widely used to assess macroeconomic achievements like  GDP.

It acknowledges investors to assess the similarities and differences between different investments with respect to their diverse sizes.

When a comparison is made, it is vital for the analysis to be made at similar time series, once the time series differs, the outcome will be automatically skewed especially in well-defined occurrences.

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Quarter on quarter has gained is common among the general public and generally accepted by governmental companies who made quarterly reports and businesses to trace their execution or action which is often represented by action undertaking of duty and comparative to the company’s aspiration or stated objectives.

QOQ  is a comparison of an alternation between one fiscal quarter and the previous fiscal quarter’s performance.

QOQ takes into consideration the short-term changes and makes comparisons with different metrics. This comparison when analyzed is an indication of the company’s performance over two quarters.

There are cases when businesses experience regression in their income and if not managed, the peak earnings at certain times can require seasonal adjustments in the measurement performance.

Uses

Quarter on quarter (QOQ) is used as a  measuring method of achieving business goals or carrying achievements, especially when it requires some skill or knowledge in the calculation of the fiscal quarter and the previous fiscal quarter with its variation.

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Also, another important function of QOQ is that it creates investors and economic analysts with the technical knowledge of a company’s growth model over each quarter usually three months intervals.

It is used as a determining magnitude for determining that branch of knowledge that studies the past; the assessment of notable events. QOQ has historic figures that engage investors and policymakers to re-plan the company’s decisions taking into consideration the company’s future preceptive.

It is used by investors to avoid and predict unnecessary business risk especially when comparisons are made among several investment quarters.

QOQ enhances any business to oversee the changes, especially in the short run. The essentiality is to monitor the progress of the company to achieve the yearly aims and objectives.

Examples

Assuming there are two companies Company 1 and company 2. Company 1 happens to be a  business novice having minimal performance and Company 2 is an Ultimate company having greater performance. It is improper to analyze the growth model of these two companies since their development proportionally varies.

Yet despite the two variations, these two companies can be computed by estimating the quarter-on-quarter of each company’s earnings growth.

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If Company 1 has a QOQ earnings growth of  (2990-1850)/1850)= 0.616 * 100 = 61.6%.

Similarly, Company 2 has a QOQ earnings growth (18 – 15)/15 = 0.2 *100 = 20%.

From the QOQ figures, it can be deduced that Company  1 processes more experienced spectacular growth than Company 2. As such, every investor could prefer to invest in Company 1 by tending to the prediction of the performance direction.

Assuming the  QOQ measurements are carried out on two companies to compare the earnings between three months.

If in the first quarter, the company’s earnings is $1.90 per share, and its second-quarter earnings were $2.15 per share. By calculating the QOQ growth between quarters ($2.15 – $1.90/$1.90)

It is an indication that the company has grown its earnings by 0.131. In percentage 0.131*100 = 13.1%  which is a positive significant indicator for any investors.

Conclusion

In any business, the growth is analyzed on a quarter e basis which is a three-month duration reflected on a company’s financial agenda for the report of earnings and the paying of dividends.

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quarterly growth is calculated by first taking the difference between the old quarterly growth and subtracting it from the new quarterly growth and dividing the result by the old quarterly growth.