What is a Business Quarter System?

The business quarter system is a method used by most public companies and many smaller companies to divide the year into 4 sections, or quarters. Quarters are used for reporting, analysis and purchasing cycles, especially when dealing with regulatory agencies such as the Securities and Exchange Commission (SEC). For many in large businesses, the business quarter system dictates schedules, goals, rewards and evaluation time frames.

Quarter Segments

The four business quarters are January through March, April through June, July through September and October through November.

Reporting

Publicly traded companies report earnings, losses and any material changes in the business at the end of every quarter, usually though a 10Q report at the end of a quarter and a 10K report at the end of the year. Many private companies also mimic this reporting cycle for investor and executive review.

Planning

Planning of purchases, sales and objectives are usually done on a quarter-by-quarter basis to emphasize the success of a business. These objectives are monitored closely and changes may occur toward the end of a business quarter to enhance profitability and sales goals such as special promotions or overtime.

Finance

The finance department of a publicly traded company revolves around the quarter system as most of the intense analysis, reporting and auditing is done at the end of a quarter cycle.

Pros

A business quarter system allows for a routine review of business operations, and it encourages businesses to move quickly to enhance profit and the value of the company.

Cons

The fast pace of a business quarter system can cause businesses to make decisions primarily for short-term gains rather than the long-term objectives of a company. The short cycle can cause businesses to over-weigh the impact on short-term stock price when making a business decision.