Quarter Over Quarter (Q/Q)

What Is Quarter Over Quarter (Q/Q)?

Quarter over quarter (Q/Q) is a measure of an investment or a company's growth from one quarter to the next. Q/Q growth is most usually used to compare a company's growth in profits or revenue despite the fact that it can likewise be utilized to depict changes in an economy's money supply, gross domestic product (GDP), or other economic measurements.

Grasping Quarter Over Quarter (Q/Q)

Investors and analysts inspect financial statements, which are delivered either yearly or quarterly, to survey the financial health of a company. The quarterly statements are publicly accessible through the EDGAR database given by the Securities and Exchange Commission (SEC) or a company's website, and are called 10-Q statements. Analysts take a gander at Q/Q numbers and changes while surveying a company's performance over various quarterly periods.

Q/Q is a rate of change in performance between one fiscal quarter and the previous quarter. A quarter is generally three months or 90 days. Q/Q measures the changes in the growth rate of various financial numbers and metrics found in the financial statements starting with one period then onto the next. Normally, the comparison is between reports from one quarter of the company's fiscal year with the reports from the previous quarter. Q/Q is calculated as follows:

(Current quarter - previous quarter)/previous quarter

Certain economic reports are delivered quarterly and compared to previous quarters to show economic growth or decline. For instance, the gross domestic product (GDP) report, delivered by the Bureau of Economic Analysis (BEA), is delivered on a quarterly premise and impacts the choices of the government, organizations, and people.

The report shows how GDP has changed starting with one quarter then onto the next and can signal conceivable economic results, like a recession or depression, as a recession is viewed as a decline in GDP over two consecutive quarters. Examining the change in GDP from one quarter to another will permit policymakers to make policy adjustments to keep away from additional economic fallout, for instance, in the event that they are seeing a declining GDP.

Varieties of Quarter Over Quarter (Q/Q)

Different varieties of Q/Q are month over month (M/M) and year-over-year (YOY). The month over month measures growth over previous months however will in general be more unpredictable than Q/Q as the rate of change is impacted by one-time occasions, like natural fiascos. The YOY measures changes in performance in one year over the previous year. YOY incorporates more data and consequently gives a better long-term image of the underlying report figure. The Q/Q rate of change is normally more unstable than the YOY measurement however less unpredictable than the M/M figure.

Real World Example

The table below shows the Q1 and Q2 earnings of Intel Corporation and IBM Corporation for 2018.

While Intel's earnings became by 11% from the first to the second quarter in 2018, IBM's earnings developed by a noteworthy 41% Q/Q. Nonetheless, note that main two consecutive quarters have been analyzed. An investor would inspect several different quarters to check whether these changes are a trend or just seasonal or brief adjustments.

Contrasting Q/Q data among companies with various quarter start dates can distort an analysis — the time included may fluctuate, and seasonal factors might become slanted. An investor would need to consider several quarters over a period of time to determine whether changes mirror a continuous trend or are influenced by outer factors. Any investor genuinely should eliminate the effects of seasonality when they can while making comparisons of companies with various quarter start dates.

Features

• Analysts think about Q/Q while evaluating a company's performance over various quarterly periods.
• Q/Q is likewise used to measure changes in other important statistics, like gross domestic product (GDP).
• There are different minor departure from Q/Q like month over month and year-over-year.
• Quarterly outcomes can be found by means of the Securities and Exchange Commission (SEC) or on a company's website.
• Looking at Q/Q data among companies with various quarter start dates can distort an analysis due to seasonal factors or transitory environmental conditions.
• Quarter over quarter (Q/Q) measures the growth of an investment or a company starting with one quarter then onto the next.