What are Fiscal Quarters?
Why do companies have fiscal quarters?
What are the essential elements you should know!
In this article, I will break down the meaning of Fiscal Quarter so you know all there is to know about it!
Keep reading as I have gathered exactly the information that you need!
Let me explain to you what are the fiscal quarters and why they are so important!
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What Are Fiscal Quarters
Fiscal quarters in business refers to consecutive three-month periods in a company’s fiscal year.
Typically, a fiscal year is divided into four fiscal quarters.
For example, if a company follows a calendar fiscal year starting from January 1st to December 31st, the fiscal quarters will be:
- January 1st to March 31st
- April 1st to June 30th
- July 1st to September 30th
- October 1st to December 31s
In this example, since the fiscal quarters follow the calendar, we can also call them the calendar quarters.
If a company does not follow a calendar quarter, then its fiscal quarters may look like this:
- February 1st to April 30th
- May 1st to July 31st
- August 1st to October 31st
- November 1st January 31st
Typically, the first quarter of the year is called Q1, the second quarter is Q2, third quarter Q3, and last quarter Q4.
Why Fiscal Quarters Are Important
Fiscal quarters are important for many companies, particularly publicly-traded companies.
In the United States, public companies are required to release their financial reports on a quarterly basis.
As a result, companies will release their quarterly financial statements shortly after the end of their fiscal year.
This is an important obligation imposed on public companies in order to provided:
- Transparency to the investing public
- Keep companies accountable for the company’s financial performance
- Allow better consistency of analysis if a company’s performance
- Allow proper valuation of the business
- Allow the public to compare one company to another
There are many other obligations or events that are linked to a company’s fiscal quarter.
For example, here are some events that are driven by fiscal quarter dates:
- Quarterly payment of taxes to the government
- Quarterly dividend payments by public companies
- Quarterly release of financial statements by public companies
Not only the fiscal quarters are important for companies to respect their legal obligations, but investors also make investment decision by comparing a company’s earnings to past quarters.
When an investor see’s that a company’s earnings are progressively increasing on a quarter-by-quarter basis, that’s a good sign that the company is performing well and may be a good investment option.
Fiscal Quarters vs Calendar Quarters
What’s the difference between fiscal quarters versus calendar quarters?
In essence, both fiscal quarters and calendar quarters represent a three-month segment of a company’s fiscal year.
The only difference between “fiscal” quarters and “calendar” quarters is that the fiscal quarter follows the company’s fiscal year that can end at any point in the year whereas the calendar quarter follows the calendar.
For example, a company following a calendar quarter will have its fiscal year start on January 1st and end on December 31st (these dates represent the beginning and end of the calendar year).
As a result, calendar quarters will represent four three-month segments in the calendar quarter (January to March, April to June, July to September, October to December).
On the other hand, a company following a fiscal year can have its fiscal year end on any day of the year and based on that its fiscal quarters can be established.
For example, if a company’s fiscal year starts on November 1st and ends on October 31st, then its fiscal quarters will go from November to January, February to April, May to July, August to October.
Fiscal Quarter Examples
Let’s look at a few examples of companies following different fiscal quarters so we can better understand the concept.
Here is an example of a company’s fiscal quarters following the same pattern as calendar quarters:
- Q1 First Quarter: January – March
- Q2 Second Quarter: April – June
- Q3 Thirst Quarter: July – September
- Q4 Fourth Quarter: October – December
Here is an example of a company’s fiscal quarter dates following a pattern other than the calendar pattern:
- Q1 First Quarter: February – April
- Q2 Second Quarter: May – July
- Q3 Thirst Quarter: August – October
- Q4 Fourth Quarter: November – January
The well-known company Apple follows has the following fiscal quarter dates:
- Q1 – October, November, December
- Q2 – January, February, March
- Q3 – April, May, June
- Q4 – July, August, September
Appel’s fiscal quarters follow non-standard fiscal quarters as their fiscal year starts on October 1st and end on September 30th.
Fiscal Quarters FAQ
Let’s look at a few commonly asked questions regarding fiscal quarters.
What are fiscal quarters
Fiscal quarters represent one of the four three-month periods in a company’s fiscal year.
Each fiscal quarter is a period of three months.
Given that in a year you have twelve months, you’ll have four fiscal quarters in every year.
How many quarters in a fiscal year
There are four quarters in a fiscal year.
Each quarter is a three-month period representing ¼ of an organization’s financial year.
Are fiscal quarters the same as calendar quarters
Fiscal quarters are generally non-standard quarters although they can be calendar quarters.
When a fiscal quarter follows a calendar quarter pattern, we’ll typically call it a calendar quarter.
When the term fiscal quarter is used, the general tendency is to refer to a non-standard fiscal quarter.
What are the four fiscal quarters
In a fiscal year (or financial year), there are four quarters as follows:
- First quarter or Q1
- Second quarter or Q2
- Third quarter or Q3
- Fourth quarter or Q4
Each of the quarters can start and end on any given day as determined by each organization.
For example, Costco’s fiscal year starts in September and ends in August.
What’s a non-standard fiscal quarter
A non-standard fiscal quarter is when a company uses a fiscal quarter that is not aligned with the calendar.
There are many reasons why companies may adopt a non-standard fiscal quarter.
The main reason though has to do with business cycles and tax planning.
Fiscal Year Quarters Takeaways
So there you have it folks!
What is a fiscal quarter?
How long is a fiscal quarter or how many quarters in a fiscal year?
“Fiscal quarters” are three-month periods within a company’s financial year or fiscal year.
In essence, each “quarter” represents one-fourth of the fiscal year.
For example, if a company’s fiscal quarter starts on January 1st, then their fiscal quarters will be the following:
- Q1: Beginning of January to end of March
- Q2: Beginning of April to end of June
- Q3: Beginning of July to end of September
- Q4: Beginning of October to end of December
A company’s fiscal quarter can start and end at any point in the year as it does not have to follow a calendar quarter setup.
Now that you know what are fiscal quarters, why they are important, and how they work, good luck with your research!
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