It is believed that when many US stock investors first came into contact with US stock earnings reports, they had headaches due to the “strange” year-end dates of the fiscal year, such as February 28, May 30, September 30, etc.

Another example is, why is the Apple earnings report announced today in the second fiscal quarter? It is clear that there are 31 days in March, so why is the current financial report due on the 28th?

With the above questions in mind, today Xiaobian will give you some trivia about the US stock fiscal year.

What is a fiscal year?

The previous calendar year's cycle was January 1 to December 31, which we can call a calendar year (Calender Year). whereasFiscal Year (Fiscal Year) is an abbreviation for a company's fiscal year or fiscal year.

China's fiscal year is from January 1 to December 31 of every year (that is, the calendar year), while the US government's guiding fiscal year range is from October 1 of the previous year to September 30 of the next year.

However, this scope of the US is not a mandatory uniform regulation. In practice, enterprises can freely choose the starting time of the fiscal year according to the characteristics of their own industry and business conditions, but in principle, the time span is 1 year.

Why do US stock listed companies choose different year end dates?

The fundamental purpose of accounting is to reflect the economic activity of an enterprise, and the most reasonable accounting cycle should reflect the actual operating activity cycle of the enterprise. Generally speaking, enterprises hope to complete the work of the previous year within the first quarter of the new fiscal year, including financial closure, annual report audit, business analysis, financial results for the previous fiscal year, etc., so that the business arrangements for the new fiscal year can be guided and adjusted in a timely manner based on the business summary of the previous fiscal year. Therefore,The best starting point for an accounting cycle is during the off-season of production and operation.

Specifically, the main reasons why US listed companies choose different year end dates are as follows:

• Match the characteristics of the industry

When listed companies choose the end date of the fiscal year, they usually consider making the financial reporting cycle more consistent with the industry's revenue cycle.

For example, Alibaba started with e-commerce, and usually the peak e-commerce season starts in the second half of the year, especially around November. Therefore, in order to fully consider the company's own situation and the way the US calculates the fiscal season and fiscal year, Alibaba has adopted a different fiscal year calculation method from other companies, that is, it starts on April 1 of every year and ends on March 31 of the following year. As can be seen from Ali's IR website, April to June 2019 is the first quarter of fiscal year 2020.

However, Good Future's business is concentrated in the K12 field. Generally, schools start school in March in spring, so Good Future's fiscal year starts on March 1. Based on this estimate, December 1, 2019 to February 29, 2020 is the fourth quarter of its fiscal year 2020.

Even if the industry is the same, the end date of the fiscal year will be affected due to different business directions. Also in the education industry, summer vacation classes are when New Oriental performs best in a year, so New Oriental's fiscal year starts on June 1. As can be seen from New Oriental's financial report for the third quarter of FY2020, the time frame is December 1, 2019 to February 29, 2020.

• Company internal management needs

Another reason is the company's internal management needs.

Take Apple as an example. Apple does not set the end date of its fiscal year on a specific day, but on the last Saturday in September of every calendar year. They split a fiscal year into 52 weeks with 364 days; a quarter divided into 13 weeks and 91 days.

Since the last Saturday in September 2019 is September 28, then Apple's 2020 fiscal year starts counting from September 29, 2019. The end date for the second quarter is the 26th week and 182 days starting September 29, or March 28.

There is another problem: there are 365 days in a normal year, and 366 days in a leap year. If 52 weeks and 364 days are counted as a fiscal year, how do you count one or two extra days each year?

According to Xiaobian's observations, if the new fiscal year ends on the last Saturday in September for more than 52 weeks, Apple will add these extra days in the first quarter of the fiscal year. For example, the first quarter of Apple's 2012 fiscal year was from September 25, 2011 to December 31, 2011, with a total of 14 weeks and 98 days; the first quarter of fiscal year 2017 was from September 25, 2016 to December 31, 2016, a total of 14 weeks and 98 days.

• Multinational enterprise management needs

For multinational enterprises with many branches and operating entities around the world, in order to facilitate unified management within the company, the fiscal year of the country where the vast majority of operating entities are located is usually selected.

Epilogue

I hope that after today's popularization of science, everyone will have a closer understanding of the company's fiscal year calculation method that they are concerned about!