Fiscal Quarter Definition
A fiscal quarter refers to the period of three consecutive months of any of the fiscal year which the company uses to report the results of its business. The same is vital for the publically traded companies as they are required to present specific information on an ongoing basis to the Securities and Exchange Commission concerning its quarterly performance in form 10-Q.
Fiscal Quarter Examples
The following are examples of this concept to understand it in a better manner.
Example #1
“A ltd” is the publicly held company which is manufacturing and selling the automobile products in the market. Suppose the company chooses the fiscal year to be the same as the calendar year, then what will be the fiscal quarters and the fiscal year for the year 2019?
Solution
A fiscal quarter refers to the period of three consecutive months of any of the fiscal year which the company uses to report the results of its business. In the present case fiscal quarter, one will start on 01st January 2019 and will end on 31st March 2019, quarter two will start on 01st April 2019 and will end on 30th June 2019 and the quarter three will start on 01st July 2019 and will end on 30th September 2019. Also, as the fiscal yearFiscal YearFiscal Year (FY) is referred to as a period lasting for twelve months and is used for budgeting, account keeping and all the other financial reporting for industries. Some of the most commonly used Fiscal Years by businesses all over the world are: 1st January to 31st December, 1st April to 31st March, 1st July to 30th June and 1st October to 30th Septemberread more is the same as the calendar year, so the fiscal year will start on 01st January 2019 and will end on 30th December 2019.
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Source: Fiscal Quarter (wallstreetmojo.com)
Example #2
Company B ltd is the publicly traded companyPublicly Traded CompanyPublicly Traded Companies, also called Publicly Listed Companies, are the Companies which list their shares on the public stock exchange allowing the trading of shares to the common public. It means that anybody can sell or buy these companies’ shares from the open market.read more that conducts the business of manufacturing and selling the garments in the market. The company wishes to keep both the calendar year and fiscal year separately and decided to start the fiscal year from July 01, 2019. In that case, what will be the fiscal quarters and the fiscal year for the company for the year 2019?
Solution
A fiscal quarter will be three consecutive months of any of the fiscal year as decided by the company to report the results of its business and meet the other requirements. In the present case fiscal quarter one will start on July 01, 2019, and will end on September 30, 2019, quarter two will start on October 01, 2019, and will end on December 31, 2019, and the quarter three will start on January 01, 2019, and will end on March 31, 2019. Also, the fiscal year, in this case, will start on July 01, 2019, and will end on June 30, 2019.
Fiscal Quarter Advantages
The following are the different advantages –
- This concept is beneficial for the companies which are having the seasonal business as this would enable the company to maintain the records properly and also to make the comparison of its performance with that of the performance of the same fiscal quarter of the previous year.
- For each of the first three quarters of the fiscal year, Form 10-Q is required to be submitted by publicly traded companies to the securities and exchange commission within the specified time as provided from the end of a fiscal quarter. However, the report for the last or fourth fiscal quarter is then combined with the whole report for the fiscal year and submitted on the Securities and Exchange Commission in Form 10-KForm 10-KPublic firms in the United States of America file Form 10-K. It is a detailed statement of the company's annual financial performance that is filed with the Securities and Exchange Commission (SEC) within 60 days of the end of the fiscal year.read more. So, this reporting follows the fiscal quarter and year concept and not the calendar year concept.
Disadvantages
The following are different disadvantages –
- The companies have to submit various details of the company to the concerned authority for every fiscal quarter. This increases the burden on the company and increases the pressure as the companies have to deliver the short term results in due time for the use of the stakeholders. If there is no fiscal quarter and no reporting is there, then the company could invest the same time in achieving its long term goals.
- According to some laws, some information is required to be followed as per the calendar year quarter, so the following quarters as per both calendar year, as well as fiscal year, becomes difficult.
Important Points
The following are different vital points –
- The period of three consecutive months of any of the fiscal year as decided by the company; this may or may not be the same as the calendar year and used to report the results of its business and meet the other requirements.
- For each of the first three fiscal quarters of the fiscal year, Form 10-Q is required to be submitted by publically traded companies to the securities and exchange commission within a specified time as provided from the end of the fiscal quarter. However, the report for the last or fourth fiscal quarter is then combined with the whole report for the fiscal year and submitted on the securities and exchange commission in Form 10-K. Here this quarter plays an important role.
- The concept of the fiscal year is not applicable in case of the Privately held organizations because they are not required to file Form 10-QForm 10-QForm 10-Q is the comprehensive financial report prepared and submitted to the SEC by all the public companies every quarter. It represents the company's financial performance and includes the previous quarter's unaudited financial statements, disclosures, management discussions and analysis and internal control reports.read more and Form 10-K with the Securities and Exchange Commission.
Conclusion
It is three consecutive months of any of the fiscal year as decided by the company to report the results of its business and meet the other requirements. It is the management of the company who has to decide that from when the fiscal quarter will start.
The concept of the fiscal year is not compulsory in case of the privately-held organizations because they are not required to file Form 10-Q and Form 10-KForm 10-KPublic firms in the United States of America file Form 10-K. It is a detailed statement of the company's annual financial performance that is filed with the Securities and Exchange Commission (SEC) within 60 days of the end of the fiscal year.read more with the Securities and Exchange Commission. However, the same is vital in case of the publicly traded companies, as they have to submit Form 10-Q for each of the first three fiscal quarters of the fiscal year to the Securities and Exchange Commission within a specified time as provided from the end of a fiscal quarter.
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