In practice, oversampling is implemented in order to reduce cost and improve performance of an
analog-to-digital converter (ADC) or
digital-to-analog converter (DAC).
[1] When oversampling by a factor of N, the
dynamic range also increases a factor of N because there are N times as many possible values for the sum. However, the signal-to-noise ratio (SNR) increases by
, because summing up uncorrelated noise increases its amplitude b
, while summing up a coherent signal increases its average by N. As a result, the SNR increases by
.
For instance, to implement a 24-bit converter, it is sufficient to use a 20-bit converter that can run at 256 times the target sampling rate. Combining 256 consecutive 20-bit samples can increase the SNR by a factor of 16, effectively adding 4 bits to the resolution and producing a single sample with 24-bit resolution.