How Do I Calculate YTD For My Business?

There are multiple ways to go about determining the profitability of your business. The simplest is the overall revenue your company shows; however, that calculation fails to take any negative cash flow into account, such as your payroll, your marketing budget, or your other investments. After all, profit calculations must account for any money you spent to get your business where it is today. This results in a calculation that looks something like total revenue – total money spent = total profit.

Total profits can be a good indicator of business success, but that’s where the analysis stops. If you want to get a better handle on how what you’ve been doing lately is affecting your profits, you’ll need a time frame to work with. As we advance into the year, you may begin seeing mentions of the term “YTD.” What is YTD? How can you calculate YTD for your business? What are the benefits of using YTD?

What Is YTD?

In simplest terms, YTD stands for year to date, a time period beginning the first day of the year up to and including today. For example, if you are reading this article on July 1st, YTD includes the time period beginning January 1st and ending July 1st. By its nature, YTD changes every day, with a given YTD figure representing the point in time at which you calculated the figure.

Alternatively, YTD in a business or government setting may refer to a fiscal year instead of a calendar year. YTD for a fiscal year refers to a year’s worth of financial records kept beginning on the date chosen as the beginning date for each fiscal year. For example, the federal government’s fiscal year begins every year on October 1st, making a fiscal year last from October 1st of one calendar year to September 30th of the next.

Usually, entities using a fiscal year will state it as such, using language like “the fiscal year ending September 30th, 2019” for the current year. However, keep in mind that entities may set their own fiscal years, so a fiscal year for a business that opened on March 1st of a year may continue to observe the beginning of a new fiscal year every March 1st. Retail businesses often choose to begin a fiscal year on February 1st, to account for the end of the holiday rush period in January.

Still others use the date of a quarterly or yearly tax filing to set their fiscal year beginning date. Regardless of a company’s choice when it comes to fiscal year start and end dates, all businesses must file taxes according to the IRS. Funnily enough, the IRS requires tax filings according to the calendar year, when it is a part of the federal government that recognizes a fiscal year beginning October 1st.

How Can You Calculate YTD for Business?

You may want to calculate YTD figures for multiple aspects of your business. For example, you may want to know the YTD payroll you’ve paid out so far so you know what to expect for the remainder of the year. Or, maybe you’d like to know your YTD marketing ad spend so you can compare it to your revenue increases.

In general, the purpose of calculating YTD figures is to establish a time period for comparison to other figures within that same time period. YTD ad spend is only useful if you’re comparing it to revenue increases over the same time period. YTD payroll as compared to revenue is only useful if you’ve calculated both over the same time period.

First, determine for which aspect you want to calculate your YTD figures. If it’s payroll, you’ll need to round up your payroll figures beginning the first of the year. If it’s profits or revenue, you’ll need to supply your financial figures. No matter what you’re calculating, however, it is important that you determine which time period your YTD covers.

Does your company use the calendar year to classify YTD? If so, use figures beginning January 1st in your calculations. If you use some other classification of YTD, such as the federal fiscal year or the retail fiscal year, ensure that your figures date back to the proper start date, especially if you mean to compare two figures against each other for the same time period. After you’ve determined the correct beginning date of the year and gathered your figures, it’s time to begin calculations.

YTD calculations are relatively simple – in fact, a good portion of the difficulty lies in gathering accurate figures and ensuring they cover proper time periods. You must only add the figures for each month of the year, plus the amount for the current month so far since YTD covers the time up to the present time. If you choose to calculate YTD ending on a certain date other than today, you must notate it as such.

YTD calculations for the current calendar year begins in January. For example, YTD profits calculated as of March 15th for a company earning $2000 in January, $3000 in February, $400 the first week in March and $500 the second week in March, plus $75 on March 15th itself look like this:

January profits + February profits + (March week 1 + March week 2 + remaining March profits) = YTD profits

Or –

$2000 + $3000 + $400 + $500 + $75 = YTD profits of $5975

Alternatively, you may want to perform calculations for YTD beginning the start of your company’s fiscal year. For example, if your fiscal year begins October 1st, YTD profit calculations as of March 15th, 2019 for a company earning $2000 in October 2018, $3000 in November 2018, $5000 in December 2018, $2000 in January 2019, $3000 in February 2019 and $975 so far in March 2019 look like this:

October 2018 profits + November 2018 profits + December 2018 profits + January 2019 profits + February 2019 profits + partial March 2019 profits = Fiscal YTD profits

Or –

$2000 + $3000 + $5000 + $2000 + $3000 + $975 = Fiscal YTD profits of $15,975

You can see how determining whether you will use the calendar year or the fiscal year can make a large difference when it comes to your company’s YTD figures. In this case, the inclusion of the extra three 2018 months of the fiscal year beginning October 1, 2018 adds an additional $10,000 to YTD profits. If you are providing financial information about your company for a small business loan or similar, the addition of a few months can make all the difference and it is important not to make a mistake.