Annualize

To annualize something is to convert it to a yearly, or annual basis. Basically, you are looking at something that takes place over an irregular period of time and standardizing it, providing a statistic that shows what would happen if you did that thing for a single year.

In finance, most information is reported on either a quarterly or annual basis. Standardizing reports in this way makes it easier to compare. Investors can see how one period of time stacks up against another. Along these lines, short-term events often get transferred into annualized rates for easier comparisons.

This comes up often in relation to interest rates, which are often given as annualized rates (See: Annualized Rates). Annualization also comes up often when reporting salaries and other income (See: Annualized Income).

Businesses often annualize their revenue and expenses so they get a better idea of the long-term impact of seemingly small decisions. If people did that, you might learn, for instance, that the number of burritos you eat in a year has reached 107, giving you an Annualized Rate Of Burrito Consumption (ARBC) of 29.32%. Based on this level of ARBC, you might decide that skipping Chipotle once and a while might be a good idea.