What is a Fiscal Quarter?

What is a Fiscal Quarter?

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September 30 marks the end of yet another fiscal quarter, and in terms of investments and company activity that signals a lot of different things. Confused? Don't worry, we're here to help.

 

Q1, 2, 3, and 4

The fiscal year is separated into literal quarters, or three-month intervals starting from January every year as 'Q1'. Currently we're in Q3 in regards to the financial fiscal year. Other institutions such as the US federal government and state governments have their own fiscal calendars that skew slightly off from this system, such as the federal government starting their fiscal year in October instead of January. There are two major things that occur every quarter; earnings reports, and dividends.

 

Earnings and Dividends

When a company goes public, there are certain requirements that the PLC, or 'publicly listed company' must accomplish. The first is sending their quarterly earnings reports to the Securities and Exchange Commission (SEC) in what's called a 10-Q Form (for Q1-Q3) and a 10-K form (or annual report) which is filed at the end of Q4. These forms contain information such as net income, earnings per share, and net sales. When analysts or investors go through this data they can get a sense of company status, market risk, and internal changes like personnel that might have effected the status of a company. 

Now for clarification, every PLC's earnings reports come at different times throughout the year, this is because each company has their own fiscal year and quarters based on their their own calendar. A good way to keep track of which companies are up to submit is with an earnings calendar which many financial publications list out. These reports help investors track performance of stocks and companies, and can also affect how a PLC's stock moves if a report is 'good' or 'bad'. Usually right before or directly after an earnings report is released is when stock will likely have the most change, as investors prepare to buy, hold, or sell. Take a look at an example earnings blanace sheet below, in this case the company is everyone's favorite, Apple (AAPL):

 

Screen Shot 2016-09-15 at 12.19.19 PM

Source: NASDAQ

 

Another way many investors and analysts get their information is from listening in on direct earnings calls. This is when executives, such as an Investment Relations Officer, or other employees of the company go through all the financial statuses via teleconference. There is a website that lets you listen to these calls, however if you're strapped for time, you can usually find the information if you go to the 'Investor Relations' page of most company websites. Places like Seeking Alpha also have transcripts of these calls and keep the information logged, unlike the investor relation pages of businesses which might only have the information from recent reports. 

The second aspect of fiscal quarters are the allocation of dividends. Dividends are not mandatory for all companies, but if a company says that they will pay dividends, then every quarter that company must pay its shareholders out of the revenue it generates in that time frame.

To understand when a shareholder will receive their dividend is dependent on the 'ex-dividend date'. Companies will state a 'record-date', or when you need to be a shareholder by to actually recieve the dividend for that quarter. After that, the ex-dividend date (the day you get paid your $$$) is set based on the exchange it's traded on. The SEC notes that this is usually "two business days before the record date" meaning, if you happen to buy a stock that pays dividends on the ex-dividend date or after, you will not recieve payment for that quarter. Instead, the payment will go to the seller, who held the stock on that record-date. 

Some of the companies that pay the highest dividends currently are listed below:

HSBC (HSBC)
BP Oil (BP)
Royal Dutch Shell (RDS.A)
The Restaurant Group (RTN)
Cobham Manufacturing (COB)

There are also comprehensive lists of all dividend stocks, however most of these dividends only yield at the most three dollars annually per one share, which most of the time doesn't even out to how much a person will pay for one share of a stock, not to mention that most investors never just buy one share of anything. Dividend payment can also consist of money, stock, property, or other assets as the amount is decided upon by the board of directors of said PLC. In the financial world, there's a lot of back and forth as to whether the dividend system is actually effective

 

 

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One response to “What is a Fiscal Quarter?”

  1. Ellen Smith says:

    I have encountered the word in so many articles before and have searched online to get an idea on it. But this is one of the best detailed explanations I have ever come across. Even a person with very limited knowledge of finance will get a picture of it. Thanks for sharing such information.
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