Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Fiscal Year-End

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 a fiscal year that begins Jan. 1 and ends Dec. 31, just like the calendar. We can say that Company ABC has a 12/31 fiscal year-end.

Now let's say that Company XYZ has a fiscal year that begins July 1 and ends June 30. We can say that Company XYZ has a 6/30 fiscal year-end.

In business, a fiscal year does not always go from Jan. 1 to Dec. 31: Many companies and governments have fiscal years beginning at other times. The federal government's fiscal year 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 seasonal factors may 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 calendar year for 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 taxpayers, it's also important to consider the fiscal year-end. Deferring income to the next fiscal year, for example, will delay or perhaps even alter a person's tax liability.