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	Charley's File #44

The purpose of management reports should be to help readers find and track patterns of performance…quickly and easily.

So which figure does a better job of this?

The gray line in the top figure takes the traditional approach: It plots total unemployment claims in the US over the past two years. This line is somewhat difficult to follow because it necessarily shows the effects of seasonal variations.

Looking only at the gray line, the trend appears to be downward, which is good news for unemployment claims. However, the split trend lines in the top figure hint at a problem because the orange line has a slightly flatter slope than the blue line.

The gray line in the bottom figure is based on the same underlying data. But this line, which plots the year-over-year ratio of performance, reveals a hidden trend.

Because the year-over-year ratio is less than 1, the gray line also shows that claims have fallen. But additionally, the trend in the line shows that the rate of improvement has been slowing for the past 12 months…at least until April.

And the two horizontal lines summarize the trends by showing the average change during each six-month period.

Usage Ideas

Year-over-year (YOY) ratios offer at least three significant benefits:

1. They automatically remove seasonality from trend lines.
2. They reveal changes in growth rates that the traditional method doesn’t.
3. Plotting YOY ratios allows us to compare the performance of dissimilar measures in the same chart.

You can plot year-over-year trends to uncover hidden trends for nearly any periodicity for nearly any measure: sales, costs, web traffic, customer complaints, key ratios, and so on.

Excel Issues

Because these workbooks rely on data returned by Kyd Web, I’ve included a “KW” version for both New and Classic workbooks. This will allow you to update this chart if you have the Kyd Web product. Otherwise, you'll use the non-KW version for your own data.

And because this is weekly data, it’s difficult to display evenly spaced periods. This is particularly true for trends longer than one year, when we need to mark the beginning of each new year.

To solve this problem...

(Continued in the documentation.)

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