What fiscal year is it now?

What fiscal year are we in?

Adam answers:

Unlike a calendar year, which always runs from January 1 through December 31, a fiscal year is simply any 12-month period that a business or other organization uses in tracking financial results. Therefore, we can not say that we are currently in a particular fiscal year — only that a business or organization is in a particular fiscal year for accounting or budgeting purposes.

As always, an example will make this more clear. Each year, public companies have to report their business results for the year. They can choose to track and report results from January through December, BUT they can also decide that they would prefer to make their “fiscal year” run from April through March or from July through June or from October through September. In most cases, an organization’s fiscal year does begin at the start of a calendar quarter — January 1, April 1, July 1, or October 1.

For a more specific example, the U.S. government uses a fiscal year that begins on October 1st and runs through September 30th of the following year. Fiscal Year 2018 goes from October 1, 2017 to September 30, 2018. (The fiscal year an organization is in will always correspond to the calendar year in which that fiscal year ends. Therefore a fiscal year that begins in 2017 but ends in 2018 is considered Fiscal Year 2018.)

Why have a fiscal year that doesn’t correspond to the calendar year? There are various reasons, but one obvious one is that a company might want to start its fiscal year closer to the time that it makes the majority of its profits (or have it end after the most profitable quarter). For example, a retailer might want to start its fiscal year on October 1 so that their first quarter financial results include the holiday shopping season, thus making it look like the company is delivering better results. If this same company began its fiscal year on January 1, most of its revenue and profitability would not be shown until the final quarter, thus making its results look lackluster for the first 9 months of the year. In the end, the results are the same; the fiscal year is simply a decision each organization makes on how it wants to report its financial results.