What is Month over Month?

Month over Month (MoM) refers to the comparison of financial data or metrics between two consecutive months to assess changes, trends, and growth rates. It’s a method used to analyze the short-term fluctuations in financial performance and to gain insights into how a company’s financial situation is evolving over a relatively brief period.

Month-over-month comparisons are commonly used to evaluate a wide range of financial metrics, including:

Revenue: Comparing the total revenue generated in one month to the revenue generated in the previous month to track sales growth or declines.

Expenses: Analyzing changes in operating expenses, production costs, and other expenditures from one month to the next.

Profitability: Assessing changes in net income, gross profit, and operating profit to understand shifts in profitability over a short period.

Cash Flow: Tracking the company’s cash flow from operations, investing, and financing activities on a monthly basis.

Key Ratios: Calculating and comparing financial ratios such as current ratio, quick ratio, and debt-to-equity ratio to evaluate liquidity and financial leverage.

Sales and Units Sold: Monitoring changes in the quantity of products or services sold and the corresponding revenue.

Customer Metrics: Analyzing changes in customer acquisition, churn rate, and customer retention over a month.

Market Performance: Assessing the month-over-month changes in stock prices, trading volumes, and other market indicators.

MoM comparisons are particularly useful for identifying short-term trends, the impact of specific events or strategies, and any immediate changes in financial performance. They help companies and investors make timely decisions and adjustments based on recent developments. However, it’s important to use MoM comparisons in conjunction with longer-term trends and other forms of analysis to gain a comprehensive understanding of a company’s financial health and performance.