Fiscal Year-End
Candlefocus EditorAt the end of a fiscal year, businesses close their books for the year and generate financial reports, such as income statements, balance sheets, and statements of cash flows. These documents detail the company’s financial activities over the past year and provide information to stakeholders, shareholders, and other investors.
Companies must also submit their financial reports to the IRS. The IRS requires that businesses report their financial results to the IRS within 90 days of the end of the fiscal year.
The fiscal year-end can also signal to shareholders and employees the end of a performance cycle. Many companies measure performance by comparing the previous year’s results to the current year’s. Setting a fiscal year-end allows for greater performance visibility over a pre-determined time period.
Finally, the fiscal year-end may also be used to set budgets and forecast inventory needs. This is especially true of organizations in industries where demand is seasonal and they must plan ahead to meet those needs. Setting a logical and consistent fiscal year-end can help a company better plan and allocate resources.
In conclusion, the choice of a fiscal year-end can have a major impact on a company’s budgeting and planning. By thoughtfully setting the right fiscal year-end date, a company can better align its financial reporting activities with the needs of the company, its investors, its stakeholders, and its employees.