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The phrase "quarter on quarter" (QoQ) refers to a technique for calculating changes in a metric's growth rate over time. Comparing one quarter to the previous quarter allows financial analysts to assess changes in a company's financial performance.
By subtracting the current quarter's metric from the prior quarter's metric and dividing the result by the prior quarter's metric, the QoQ change is calculated. To translate the change into a percentage, the result is multiplied by 100.
For example, if a company's revenue in Q1 was $1 million and in Q2 it was $1.2 million, the QoQ change in revenue would be:
(($1.2 million - $1 million) / $1 million) x 100 = 20%
This shows that when compared to Q1, the company's sales increased by 20% in Q2.
QoQ analysis can be beneficial in predicting future growth or decline and finding short-term trends in a company's financial performance. It is crucial to remember that QoQ analysis is simply one tool for assessing financial performance and should be combined with other tools for a thorough assessment.
