Annualized Income

A figure computing the amount earned by a person (or a business) as if the earnings took place over the course of a year. The process of annualization is used to make easier comparisons of financial events that take place over irregular periods of time (See: Annualize).

Annualization comes up a lot in calculating income. Salaried employees often get their wages reported as yearly amounts. For instance, a bank clerk's pay might get advertised as $45,000 a year. You'll rarely see a job posting giving that figure as $3,750 a month or as $173.08 a day. This allows for better comparison of items that might have complicating factors.

For instance, one job might have a lower hourly wage, but significant opportunity for overtime. Meanwhile, a second job might have an irregular schedule, say alternating shifts of three days one week and four days in the following week. Comparing the earnings from the two positions might be difficult on a weekly or monthly basis, but becomes easier when the figures are annualized.