Successive Periods
Categories: Accounting
Pretty sure they covered this in health class, but we weren't paying attention.
As regards money, it's not what you have...it's what you have in comparison to everyone else. More money than your neighbors, more than your friends, certainly more than that jerk from high school who stole your clothes while you were in the shower after gym class.
That "everyone else" also includes yourself. At least..."past" you.
The rule applies to companies as well as individuals. If you run a public company, shareholders don't just want you to make money. You have to keep on making more money. Meaning: the amount you earn now has to be more than the amount you were earning before. There are a couple of options when making that comparison to the past. One possibility involves comparing with last year's results. The other leads to a discussion of successive periods.
Usually, companies report their results in quarterly installments, or every three months. There are four quarters in a year, usually labeled Q1, Q2, Q3, and Q4. If you compare Q1 this year with Q1 last year, you're making a year-over-year comparison. However, if you compare Q2 to Q1, then you are comparing successive periods: chunks of time that happen one after the other. In succession.
Year-over-year comparisons usually take precedence on Wall Street. That way, you can compare times with similar seasonal influences...this holiday season with last holiday season, etc. Comparing successive periods sometimes works, but sometimes just creates a lot of noise. If you run a ski resort, your Q4 results will always look significantly better than Q3, because Q4 includes the beginning of your winter season. You don't get many skiers in August. Q3 will probably always show a loss for your ski resort, while Q4 will probably always show a profit. Meanwhile, Q1 of next year (the successive period from this year's Q4) will always be even better than Q4.
