What is Year to Date (YTD)?
Year-to-date (YTD) describes the passage of time between the first day of the year — either the calendar year or the fiscal year — and the current day.
Businesses often use year-to-date (YTD) to analyze business trends since the beginning of a calendar or fiscal year. A fiscal year is 12 months, just like a calendar year, but it doesn’t always begin on January 1. Some businesses start their fiscal year on July 1. In that case, YTD would refer to the period from July 1 to the current date. A company might use YTD to compare a financial statement like an income statement or balance sheet to the same period in the previous year. So, for a fiscal year beginning on January 1, the company's three-month YTD financial statement would account for a company’s finances from January 1 to March 31.
The fictional company, Mike’s Computer Repair, has a fiscal year that runs from January 1 to December 31. CEO Mike is preparing the company’s YTD income statement for the first quarter of the year — this is a summary of the company’s revenue and expenses from January 1 to the current date of March 31. This income statement will allow Mike to compare his company’s YTD income for this year to his company’s income from the same period last year.
YTD is like your car’s odometer…
Your car’s odometer represents the number of miles you’ve driven since the beginning of a certain period (in this case, since the car came out of the manufacturing plant). Likewise, YTD represents the passage of days since the beginning of a certain period (either the calendar year or the fiscal year).
When it comes to calculating YTD, there are usually two different options. You can calculate YTD from the beginning of the calendar year, which is January 1. This date is what most of us think of as the beginning of the year. Or you can calculate it from the beginning of the fiscal year.
Some governments and corporations run their finances on a different calendar — called a fiscal year. It’s still a 12-month period, but it doesn’t necessarily start January 1. The federal government has a fiscal year that starts October 1 and ends September 30. Many state governments and corporations run their fiscal years from July 1 to June 30 of the following year.
Companies often use YTD figures to compare their financials from one year or one period to the next. They might do this by comparing the YTD financial statements (such as income statements and balance sheets) from the same periods of two different years.
For example, let’s say that a small business has prepared a summary of their sales for the year to date as of June 30 (with a fiscal year starting January 1). They want to see how the business is growing, so they compare that information with the summary of sales from the first six months of the previous year.
But why does YTD matter? Why not just analyze the sales from the last six months with the sales from six months before? Comparing the same period from one year to the next can give a more accurate picture of how a company is actually doing.
Think about this in terms of a retail store. The end of the year is a massive time for retail — Black Friday and Christmas shopping typically bring in a ton of money for companies. So if a retail store were to compare the first three months of 2020 with the last three months of 2019, they might not like what they see. That is, their sales may have gone down from one quarter to the next. It’s not that the business isn’t doing well, it’s just that the company makes more of its sales in the last quarter than they do in the first quarter. It would make more sense for that retail store to compare the first quarter of 2020 with the first quarter of 2019.
Companies generally check in on their finances regularly throughout the year. They don’t merely wait until December 31 to check the books and see how their revenue compared to last year. They’re always ensuring the health of their company so they can make any necessary changes to get back on track or maximize profits. And companies who set specific goals for each period of the year can easily check to see if they’ve met those YTD goals for any period.
Year-to-date earnings are those that have been paid to an employee since the beginning of the year. YTD earnings usually refer to gross income, which is the employee’s income before any taxes have been taken out. You can also refer to an employee’s YTD net pay, which is their YTD earnings after taxes and deductions (such as those for a 401(k) plan) have been taken out.
As an employee, you can easily calculate your YTD salary by looking at your pay stubs. All you would have to do is collect each of your pay stubs for the year and add together the amount on each. You can find your YTD gross income, which is the amount before any taxes or deductions come out, or your YTD take-home pay, which is the amount of money you actually got in your bank account.
Let’s say it’s July 1, and you want to figure out your YTD income for the year. You get paid on the first of each month, so you just got paid today. You look at your most recent pay stub and see that your take-home pay was $2,500. Your income hasn’t changed, so it was $2,500 on the first six paychecks of the year, too, bringing your YTD income to $17,500.
Year-to-date payroll looks at employee pay from the employer’s perspective, not the employee’s. For an employer to calculate YTD payroll, they would look at the gross pay for each of their employees and add them all together. This calculation will tell them how much they have spent on wages since the beginning of the year.
YTD payroll can help a business owner to compare so far this year to the same period last year. It can also help them to see whether they’re on track to meet their budget for the year based on what they expected to spend on employee payroll. After all, knowing your expenses as a business owner is a big part of helping you to prepare for tax time.
Year-to-date returns are the profit someone has made on an investment since the beginning of the year. You could be talking about the YTD return on just one investment, such as a bond or single security, or the YTD return on an investor’s entire portfolio.
Calculating the YTD return on your portfolio is just as easy. Take your portfolio’s starting value and subtract it from the current value. Finally, divide the result by the starting value to show the percentage increase you’ve seen over the year. As a note, this number appears as a decimal. Simply multiply by 100 to convert the number into a percentage.
Imagine that your investment portfolio has $107,000. On January 1 this year, your portfolio had $100,000. You subtract $100,000 from $107,000 — the result is $7,000. You divide $7,000 by $100,000, resulting .07. When you multiply by 100, you get a result of 7, meaning your portfolio has increased by 7% YTD.
Year-to-date interest represents the amount of interest you’ve paid since the beginning of the year. This interest could be that which you have paid on a student loan, a mortgage, a credit card, or any other type of interest-bearing debt. YTD interest could also represent interest earned on a savings account, bond, or other interest-bearing investment.
Let’s say you have a student loan with a 4% interest rate. Each month when you make your payment, some of it goes to the principal (the amount you borrowed), and some of it goes toward interest. Your account should show a breakdown of how much went toward each expense each month so that you can calculate your own YTD interest. Then, at the end of the year, your lender will send you a Form-1098 E, which is a breakdown of how much interest you have paid for the entire year.
Similar to year-to-date is month to date, which is the time from the beginning of the month to the most recent full business day. If the current business day hasn’t concluded, then month-to-date is the time from the beginning of the month to the previous business day.
Let’s say that today is September 19, 2020. The last full business day of the month was the day before, on September 18. MTD, in this case, would refer to the period from September 1, 2020, to September 18, 2020. The business owner could easily look at the financials for September 1-18 for this year and compare it to the same period last year.
What is Underwriting
Underwriting is the evaluation of risks associated with a proposed financial arrangement to determine whether they outweigh potential rewards.
What is Adverse Selection?
Adverse selection occurs when incomplete information leads you to pay or charge an amount that doesn't match an undisclosed risk.
What is Furniture, Fixtures, and Equipment (FF&E)?
Furniture, Fixtures, and Equipment (FF&E) is business property not permanently connected to a building such as office furniture, partitions, and business equipment used in the operations of a company.
What is a Value Chain?
A value chain represents each of the functions within a company’s operations that add value to the customer, thus increasing what they are willing to pay.
What is Profit Margin?
Profit margin measures how many cents of profit a company keeps for every dollar it spends.