Fiscal Year

Written By
Paul Tracy
Updated July 21, 2021

What Is a Fiscal Year?

A fiscal year is an accounting period of 365 days (or 366 during a leap year) that doesn’t necessarily correspond to the calendar year that begins on January 1st. 

Fiscal years are an established period of time when an organization's annual financial records start and conclude.

Fiscal Year Example

The US government’s fiscal year begins on October 1st and ends on September 30th. For example, the government's fiscal year for 2021 begins on October 1, 2020 (the year before) and the fiscal year ends on September 30, 2021.

How Do Fiscal Years Work?

It’s important to remember that a fiscal year doesn't necessarily correspond with the calendar year. Although it may not seem very important, the start of a company’s fiscal year can have an impact on its fundamental analysis. This is especially true of cyclical companies.

Consider a retailer with an incredible first fiscal quarter. Investors may look at that company and be led to believe that the company will post even higher earnings during the holiday season (Q4). 

However, if that company started its fiscal year in September, then its first-quarter earnings will have already encompassed the higher sales that accompany the holiday shopping season – and the remaining three quarters will likely be lower.
 

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All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Fiscal Year.

How Many Days Are in a Fiscal Year? 

Most typically, there are 365 days in a fiscal year. However, during leap years, this number will shift to 366 days. 
 

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

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