Month over month (MoM)

Definition

Month over month (MoM) is a financial metric used to compare the performance of a particular variable or indicator between two consecutive months.

What is month over month?

Month over month is commonly employed in business and finance to analyse trends, identify patterns, and monitor changes over time.

MoM compares data from one month to the previous month and analyses can be applied to various types of data, including revenues, expenses, profits, sales volume, customer acquisition, website traffic, and other key performance indicators (KPIs).

The primary measure used in MoM analysis is the percentage change between the two months. This is calculated using the formula:

MoM % change = ( (Current month value − Previous month value) / Previous month value) x 100%

A positive MoM percentage change indicates growth or improvement, while a negative MoM percentage change indicates a decline or deterioration.

It’s important to consider seasonal factors and cyclical patterns when interpreting MoM changes, as certain months may exhibit consistent seasonal variations due to factors such as holidays, weather, or industry-specific trends.

Example of month over month

ABC Retail Corporation analyses its monthly sales data for the first quarter of the year. They observe the following sales figures for January and February:

• January sales: R100,000
• February sales: R120,000

To calculate the MoM percentage change in sales from January to February:

MoM % change = ( (February sales – January sales) / January sales) x 100%

MoM % change = ( (R120,000 – R100,000) / R100,000) x 100% = 20%

So, the MoM percentage change in sales from January to February is 20%, indicating a significant increase in sales performance between the two months.