The technique in statistics of taking a figure covering a period of less than one year and extrapolating it to cover a full one year period. The process is known as annualizing.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The expression of a variable in yearly terms even though the variable does not directly apply to a year. That is, a variable expressed on an annual basis has been mathematically converted to yearly terms. For example, if the return rate on an investment is 2% after one month, one computes the return on an annual basis by multiplying by twelve, resulting in a 24% return rate. A variable on an annual basis is often theoretical; there is often no guarantee that the return rate in the example above will be 24% if it is calculated after a month or two. An annual basis usually does not take into account the effects of compounding. It is also called annualization.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved