by Jitta
Apr 5, 2017 • Last updated: Jan 12, 2023
Understanding the Fiscal Year

There are many people who would like to know more about the Fiscal Year and the Calendar Year. Many might be confused by the Factsheet, because some companies would have their quarterly revenue and profit figures before others. Here’s the explanation:

The Calendar Year is the year that we all use, from January to December, whereas the Fiscal Year depends on the company’s finance department’s policy concerning when do they want to close off the financial reports. The month that contains the final financial data does not necessarily have to be December. And the closing date of the final trimester would be 3 months after the closing of the financial account statements.

For example, Apple closes its financial account at the end of September, therefore, the new Fiscal Year would be October 1, and the closing dates of trimesters 1, 2, and 3 would be December, March, and June respectively.

On the other hand, Google closes its accounts at the end of December, therefore, the closing dates of trimesters 1, 2, and 3 would be the end of March, June, and September respectively, which would match with the normal calendar year.

In a more complicated case, such as Walmart, the company closes its account for Fiscal Year 2013 in January 2014 (Calendar Year), making the closing date of trimester 1 in 2014 (Q1 Fiscal 2014) fall on the end of April 2013 (Calendar Year).

The reason companies do not follow the Calendar Year when closing their accounts is because of managerial purposes. For example, with Walmart, the peak selling periods are during the end of the year. This why Walmart doesn’t want to close its accounts during the year end, which is already busy enough as it is. So they wait until the end of January to do so, so that they have a bit of breathing time after the peak selling period, and allow themselves to have extra time to check inventory levels. Many stocks in the retail group also close their accounts at the end of January as well.

(Jitta Factsheet contains information on the closing date of each company’s Fiscal Year at the bottom left of the Quarterly charts, so that investors can correctly view all the figures)

Calculating the Jitta Score and Jitta Line also takes into account the overlapping of the Fiscal Year and Calendar Year, and readjust the figures accordingly. This ensures that the Jitta Score and Jitta Line reflects the correct figures the company has announced, thus truly representing the present quality and price of the company as close to present value as possible.

For example, if we want to calculate Walmart’s Jitta Score and Jitta Line at the end of September 2013, Jitta will use the historical financial data since Fiscal 2004 to Fiscal 2013 at year end on January 31, 2013, including the two released financial statements from Q1 and Q2 (of Fiscal 2014).

Actually, if you read financial statements for some time, you will find that you are able to calculate all the figures quite easily for each stock. But you will also find that it is extremely difficult to do so for every stock in the market, because there are many special cases that you have to work around.

During the first stages of developing our Jitta Score and Jitta Line (back when we were in America), we spent a lot of time altering and creating a standard by which we can adjust the Fiscal Year to the Calendar Year.

It is actually a good thing that we started doing this with stocks in the United States, because there are many companies that have unusual Fiscal Years and policies, which made us pros at adjusting and finding new solutions to make things work. This made me confident that we will be able to handle any market in any country from now on.

“Eat The Frog” always works.