what is a base year 
a base year is the first of a series of years in an economic or financial index in this context it is typically set to an arbitrary level of 100 new up to date base years are periodically introduced to keep data current in a particular index base years are also used to measure the growth of a company any year can serve as a base year but analysts typically choose recent years understanding base yeara base year is used for comparison in the measure of business activity or economic or financial index for example to find the rate of inflation between 2016 and 2021 2016 is the base year or the first year in the time set the base year can also describe the starting point from a point of growth or a baseline for calculating same store sales many financial ratios are based on growth because analysts want to know how much a particular number changes from one period to the next the growth rate equation is current year base year base year the past in ratio analysis is the base period 1growth analysis is a commonly used way to describe company performance particularly for sales if company a grows sales from 100 000 to 140 000 this implies that the company increased sales by 40 where 100 000 represents the base year value investors can perform a base year analysis of a company s financial statements to determine whether or not its bottom line is growing consistently base year and same store sales calculationscompanies are always looking for ways to increase sales one way that companies grow sales is by opening new stores or branches new stores have higher growth rates because they are starting from zero and each new store sale is an incremental sale as a result analysts look at additional factors such as how much sales grew on a same store sales basis this is also referred to as measuring comparable stores or comp store sales in the calculation of comp store sales the base year represents the starting point for the number of stores and the amount of sales those stores generated the store sold an average of 1 000 if company a has 100 stores that sold a total of 100 000 last year this is the base year following this method the base year determines the base sales and the base number of stores 2let s say that company a opens 100 more stores in the following year and these stores generate 50 000 but same store sales decline in value by 10 from 100 000 to 90 000 the company can report a 40 growth in sales from 100 000 to 140 000 but savvy analysts are more interested in the 10 decline in same store sales 