Year to Date (YTD)

What is the meaning of Year to Date (YTD)?

The term “Year to Date” or YTD may seem confusing at first, but understanding what it means is fairly simple. When we say year to date, this refers to the period between the first day of the current calendar year or fiscal year and the current date before the end of the year. To put it in another way, year to date is between two points: 

• The beginning of the calendar (or fiscal) year; and
• The present date or a specified date.

What is the difference between a fiscal year and a calendar year? 

To determine the year to date accurately, we first need to define if the organization uses a calendar or fiscal year. While many people would easily assume that the start of the year is on January 1, this does not apply to all companies. 

When we say calendar year, this generally refers to January 1 to December 31. On the other hand, the start of the fiscal year is determined by the organization. 

To make it clearer, let’s see an example.

Company Blue’s fiscal year starts on July 1. The current date is November 1. What is the YTD in relation to the calendar and fiscal year?

• Company Blue’s Calendar Year to Date period: Starts from January 1 to November 1. 
• Company Blue’s Fiscal Year to Date period: Start from July 1 to November 1.  

What if you are being asked to extract data for a company that has not defined a fiscal year? 

Companies usually determine if they follow a fiscal or calendar year. However, in case the YTD is not specific to a fiscal year, the calendar year is generally used as a reference. 

Why is year to date data important? 

In running a business, numbers come into play every single day. Knowing how to derive different types of data, both historical and current, is useful. More importantly, how the data is used to help an organization can mean the difference between going uphill or downhill. 

Year to date information can help businesses in numerous ways. First, business owners, leaders, managers, and employees can track all types of information depending on their needs. Do you need to monitor sales YTD? How about business costs and expenses? What are the payroll expenses that you have incurred year to date? How do the data this year differ from last year, or the year before? Making accurate comparisons is easier when you know exactly when a given data was derived. This can be used in predicting tax liability, payroll, and other expenses. Also, year to date information helps business analysts study and set business trends. 

Year to date information can also help companies see where they stand in terms of company performance compared with other businesses and competitors in the industry. When you are not comparing your business with industry standards, year to date information helps you see a clear picture of components within your business. For example, do you need to carry out a financial review? How about studying year to date targets of employees for promotion? How can you determine which expenses you are overspending on? All these and more use year to date information. 

Does year to date use gross or net figures? 

Year to date information is generally calculated on gross figures. Meaning, before any expense is taken from it. For example, when we speak about year to date in payroll, this is the figure that an employee earns before taking out taxes and other applicable deductions. 

Please note that year to date earnings refer to the net amount.