Business quarters are a useful part of every company's financial reporting process. By dividing the business year into quartiles, a company can effectively manage and assess its financial strengths and weaknesses, which can help improve its overall functionality. For a publicly traded company, the information released in a quarterly financial report can have a significant affect on the actions of its investors.
Every business and governmental agency functions and manages its accounting and finances according to a specific business calendar. To keep track of important financial information, such as profits, income, losses, and expenses, companies organize and assess this information in terms of calendar quarters. A calendar quarter is equivalent to three months. The first three months of the year -- January, February and March -- make up the first quarter of the calendar year.
The exact months that constitute a given company's business quarter are determined by the start of the company's fiscal year. For most companies the fiscal, or budget year, ends at the end of either June or September, which makes July 1 or October 1 the start of each respective financial year. For example, if a company uses a fiscal year that begins on July 1, the first three months of the company's business calendar would be July, August and September, which would also be the first quarter.
Business quarters are especially important for companies that are publicly traded, or those that have shareholders. Investors and analysts rely on the quarterly financial statements of such companies to guide them in making investment decisions and financial forecasts. A company's quarterly reports can affect the company's stock price, serve as an indicator of the overall health of the company and be used as an indication of where the company is heading financially.
Notice and Effect
When a publicly traded company releases its quarterly financial statements it does so in a public forum. Such information is usually released to financial publications, media and through reports sent to shareholders. The information contained in such reports cannot be underestimated. If the information is below expectations, a company may experience a decline in stock value. Conversely, if the information is favorable, investors may purchase more stock and subsequently increase the company's stock price.
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