The full-form of QoQ is ‘Quarter On Quarter’ or ‘Quarter Over Quarter’. That means, the quarterly results of one quarter is compared to the quarterly results of the previous quarter.

In other words, the financial results of Q3 2019 is compared to Q2 2019.

A company that is listed on the stock market has to announce its financial results every quarter.

After the end of each quarter (period of 3 months), a company will declare its financial results.

- Quarter 1 (Q1) – April to June
- Quarter 2 (Q2) – July to September
- Quarter 3 (Q3) – October to December
- Quarter 4 (Q4) – January to March

## How to Calculate ‘Quarter Over Quarter’ growth?

- Get the financial results from the balance sheet of a company.
- Choose which time period (quarter) you want to calculate QoQ growth.
- Subtract last quarter’s number from current quarter’s number.
- If the number is positive, there has been quarter over quarter growth.
- If the number is negative, there has been quarter over quarter de-growth.

To calculate the percentage, the formula is:

## QoQ Growth Simple Example

Let’s assume a company called ‘XYZ Ltd’ has earned profit of ₹ 10,000 in Q2 2019.

In Q3 2019, the company has earned profit of ₹ 12,000.

How much is the quarter on year profit?

Q3 2019 – Q2 2019.

12000 – 10000 = 2000.

The company has shown growth in profit, quarter on quarter.

To get percentage, apply the formula:

The QoQ growth is 20%.

## QoQ Growth Real Example

To understand and begin using QoQ on real companies, let’s take example of Reliance Industries.

Ignore everything you see in the image below, except the numbers in the pink box.

The first line of numbers is ‘Sales’ which can also be called total earnings before deducting any expenses or taxes.

The last line of numbers is ‘Net Profit’ which is the total profit a company has earned after deducting everything.

Now, for our example, we will compare the revenue and profit growth percentage between Q2 2019 and the previous quarter Q1 2019.

To calculate revenue growth percentage, let’s apply the same formula.

The way to calculate would be:

- 149302 – 156976 = -7674 (Total Sales Growth)
- -7674 / 156976 = -0.0488 multiplied by 100 = -4.88% (Sales Growth Percentage)

Profit growth calculation is similar:

[ (11262 – 10104) / 10104 ] * 100 = 11.46%

Reliance Industries sales fell 4.88% quarter over quarter, whereas the net profit rose 11.46% QoQ.

If you have any doubts, feel free to ask your questions in the comments section below.

## Leave a Comment