A fiscal year (FY) is a 12-month period that businesses and governments use to prepare financial statements and budgets. It is the accounting period that a company uses to report its earnings and other financial data.
Unlike the calendar year (January 1 to December 31), a fiscal year can start on any date. Most companies and governments select a fiscal year that aligns with their operational cycles or industry standards.
The determination of a fiscal year is crucial for tax purposes, financial reporting, and strategic planning. It allows for consistent tracking of financial performance over a defined period.
Governments use fiscal years to manage public spending and revenue collection. Businesses use them for annual reporting, investment decisions, and performance evaluation.
A common misconception is that the fiscal year always equals the calendar year. It’s important to clarify the specific FY in use for accurate financial analysis.
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