In general, we all know that one year has, overall, twelve months. However, some companies release their reports after every three months. This is generally known as the quarterly reports and as the name suggests, having a performance report out once in three months means that the three-month trio is a quarter. Other companies release their reports twice a month, which is normally after every six months. These are known as biannual reports, which contribute to discussing the performance that had happened in the past six months with possible reflections for the future.
What is the fiscal year?
The fiscal year represents a 12-month or 52 weeks period that an organization uses to report its finances. However, the fiscal year does not always start at the beginning of the year. Usually, the fiscal year starts at the beginning of a quarter, such as January 1, April 1, July 1, etc.
How long is a fiscal year? The fiscal year is a 12-month or 52 weeks period long.
However, what happens when the company decides to release its reports once a year. When a company releases a report once a year suggesting how the performance was and future perspectives, this is known as the annual report, and the year for which the report was released is referred to as a fiscal year. The companies often release the report in December or the following January; however, there is no hard and fast rule related to it, and it can be changed as well. For example, a fiscal year may run from March of one year till March of next year.
When does the fiscal year start?
Usually, the fiscal year starts beginning of a quarter, such as January 1, April 1, July 1, etc. Each country or sector has a different fiscal year starting date. For example, the fiscal year for the US federal government begins on October 1 and ends on September 30. The fiscal year 2021 begins on October 1, 2020, and ends on September 30, 2021.
As established above, a fiscal year consists of a company’s performance from one month to the same month in the next year. Most companies adhere to the traditional calendar period of having a fiscal year from January to December. However, many companies do not follow the conventional calendar and run their fiscal year differently.
If a fiscal year starting from July 2019 and ends in June 2020, then the report would be for the fiscal year of 2020, and it would be denoted by FY20.
There is another terminology known as fiscal year-end, which means the fiscal year’s date would be ceasing. The government has a fiscal year that runs from first October and ends on 30th September in America. Therefore, every government or company changes the fiscal year according to their profits and which months are more suited to them. On the contrary, Facebook has a fiscal year that adheres to the conventional character from January to December. It is also much easier to remember and does not hold confusion; however, you should know about the different companies and their fiscal years when working for one.
What fiscal year is it now in the US?
It is the 2021 fiscal year or FY21 in the US because 2021 begins on October 1, 2020, and ends on September 30, 2021.
What is the meaning of FY?
FY is the abbreviation that is used for a fiscal year. In general, when you speak of a particular year and how the fiscal year report would be, you use some numbers in two digits after the abbreviation of FY. So, for example, if you speak of a fiscal year that starts in April 2020 and ends on 31 March 2021, you would be speaking about the fiscal year of 2021, denoted by FY21.
When does the fiscal year-end?
There is another term which is known as a fiscal year-end. As the term denotes, the date at which the fiscal year is coming to an end or is ceasing. It is usually the last date of the month, especially the last date of a quarter. For example, it can be March 31, June 30, September 30, or most commonly used, December 31. It varies and depends on its profits, working, and vision, impacting the fiscal year.
Why are fiscal years not the same running as the conventional calendar?
It is effortless to align your fiscal year with the conventional calendar; however, there are many factors that the companies have to consider to see what the fiscal year would be. Some of these factors are listed below:
1. Their business: The business spendings and profits are different for each company, and in general, it is not very wise to align the calendar’s fiscal year. Sure it is much easier to do so; however, in general, it is not recommended. This is because the company has different strategies and different sales viewpoints as well. For example, a company like Apple or H & M has much higher profits when there is a holiday season. Therefore, when they compile a report, they are likely to put the higher numbers at the end of the report, leaving a lasting impact on the reader’s mind. Therefore business people are also more likely to invest in their stocks at the last minute as well. Thus, this strategy is used in the business world and adjusted according to the business seasonality as the term is used.
2. Savings: When writing a fiscal year report, you have to write an audit report. In this, you have to hire a specific accountant that may generally be busier at the end of the year in December. They are also likely to charge a higher fee at the end of the year because they know their demand. This is why some companies choose a fiscal year to run from mid of one year to mid another to be free and conduct their audit reports effectively.
3. Starting date: Many companies begin their activities in the middle of the year or the second quarter. The starting dates of the company also effectively have an impact on what the fiscal year would be. The expenses should be reflected when the company has started working effectively. The revenues and profits would also be written in the report effectively; however, if a company does not have a starting date, its report would leave no impact as there would not be any well-known facts to be written.
Can a fiscal year be changed as per the company’s demands?
Yes, a company can change the fiscal year as per their own need and as per their own schedule. A lot of factors affect what the fiscal year can be. These can be affected by forecasts, profits, and holiday seasons. Overall, a company needs to assess the quarter with the highest sales and profit to make the ending year numbers the highest. This will have a lasting impact on the company’s fiscal year report as well. If a company makes the highest profit in August, it can change its fiscal year accordingly as there is no hard and fast rule applied to it.
Is a tax year different from a fiscal year?
A tax year is specifically known to have the returns and taxes accounted into a single document. The tax year can also run from January to December or from year one to the month of year two. It is up to the company to choose between a fiscal year or a tax year, but you have to calculate all of the taxes and file them before the closing if you choose the tax year.
What is the government fiscal year?
The government fiscal year is annually reflected in the budget. However, it does not necessarily start from January and is different for different countries. For example, in the United States of America, the fiscal year starts from the first day of October.
What is the meaning of a quarter?
When the company decides to release its reports every three months in a year, this is known as a quarterly report. This is generally known as the quarterly reports and as the name suggests, having a performance report out once in three months means that the three-month trio is a quarter.
In general, the year which has twelve months has four quarters. A certain abbreviation designates each quarter; for example, quarter one is written as Q1, quarter two is written as Q2, quarter three is written as Q3, and quarter four is written as Q4.
Quarters are also written in such a form that designates that it belongs to a certain year. For example, if you see Q1/21 written, you refer to quarter one of 2021. You can write different quarters with years to grasp the concept as well.
When we speak about the companies, there are generally two types of terms that are used widely. One is known as the fiscal year, and the other is the fiscal quarter. As discussed in the article, the fiscal year refers to a whole year. Although it can differ from the calendar in terms of not necessarily starting in January, most companies adhere to the conventional calendar practice and begin the fiscal year in January that runs till December 31. However, fiscal quarters refer to four quarters as discussed, and mostly they adhere to the calendar. In this term, you can see that the quarters are as follows:
1. January, February, March- Quarter One- Q1
2. April, May, June- Quarter Two-Q2
3. July, August, September- Quarter Three- Q3
4. October, November, December- Quarter Four- Q4
When does 1st quarter end?
The 1st quarter ends on 31 March.
Quarters by days are:
- First-quarter, Q1: 1 January – 31 March (90 days or 91 days in leap years)
- Second-quarter, Q2: 1 April – 30 June (91 days)
- Third-quarter, Q3: 1 July – 30 September (92 days)
- Fourth-quarter, Q4: 1 October – 31 December (92 days)
It is important to understand that a fiscal quarter is aligned or in line with the fiscal year.
Do quarters in every company go by the conventional calendar system?
The quarters of the different companies may mean different things. For example, it is never a hard and fast rule that quarter one would be the busiest and quarter two and three would be slow for every company. The first quarter doesn’t need to start from January till March. Many companies such as Walmart start their quarter one in February, and then the cycle continues. This is because each company and its dynamic differ, and there is no hard and fast rule applied to the quarters. They have to consider different factors as well, such as their sales and business growth. Many companies also do not consider the starting of the month as the beginning of a quarter. They may begin with a specific date, for example, the fifteenth of a month.