What it is:
A fiscal year-end is the end of a 12-month, 365-day, or 13-period (or other measure) period of time.
How it works (Example):
Let's say Company ABC has athat begins Jan. 1 and ends Dec. 31, just like the calendar. We can say that Company ABC has a 12/31 -end.
Now let's say that Company XYZ has athat begins July 1 and ends June 30. We can say that Company XYZ has a 6/30 -end.
In business, adoes not always go from Jan. 1 to Dec. 31: Many companies and governments have beginning at other times. The federal government's ends Sept. 30, for instance.
Why it Matters:
Yearly information is useful in looking for trends or measuring performance against goals. Remember, though, comparing year-over-year information among companies with different fiscal-year start dates can distort an analysis: The time included may vary and seasonalmay become skewed. It is also important to remember that the extra day in leap years may distort comparisons.
Investors need to know which companies use the accounting purposes when they are comparing companies. Particularly for seasonal industries, one company's first quarter could fall in winter and another's could fall in the summer. Thus, comparing quarterly results could become misleading if companies differ in their use of the calendar year.for