What Is a Quarterly Report?

Key Points

It is common practice for businesses to provide financial statements such as income statements and balance sheet quarterly in the form of a report that summarizes or compiles these documents.

Businesses that are traded on a public exchange need to submit their quarterly reports to the Securities and Exchange Commission on a form known as Form 10-Q. (SEC).

The executive summary, key points, and long-term objectives are regular features of the quarterly reports.

Organizations are expected to publish something called a quarterly report every three months. This report is either a summary or compilation of their unaudited financial statements. Examples of financial statements include balance sheets, statements of income, and cash flow statements (three months). In addition to presenting data every quarter, these statements may also give year-to-date and comparative results (for example, comparing the results of the previous year's quarter to those of the current year's quarter). Companies that are traded on a public exchange need to submit their reports to the Securities and Exchange Committee (SEC).

Lots of companies use an accounting period that coincides with the calendar year, with the year ending on December 31st and each quarter ending on one of the following dates: March 31st, June 30th, September 30th, and December 31st. The due date for filing quarterly reports is normally within a few weeks after the end of each quarter.

Understanding Quarterly Reports

The most important accounting and financial statistics for an organization, such as the company's total revenue, net profit, operating expenditures, and cash flow, are included in quarterly reports. Issuers of publicly traded shares are required by the Securities and Exchange Commission (SEC) to submit annual reports on Form 10-K and quarterly reports on Form 10-Q within sixty days of the end of the respective periods for which the reports are required to be submitted. These forms could contain more information than the annual and quarterly reports provide.

A top business will often give a presentation to analysts and shareholders every quarter, detailing the company's progress as measured by several key performance indicators. The company's management will often provide expectations regarding the future financial outcomes of the company. Afterwards, time will be allotted for questions and answers.

It is common practice for experts who monitor firms to offer their projections of important indicators for future reporting periods. The various financial media then average the estimates to get the street consensus estimates. It is claimed that a company has "beaten expectations" when its results are better than these estimates. Companies are considered to have fulfilled expectations when their achievements are comparable to the estimations made for them. Companies are considered to have "missed expectations" when their performance falls short of their projections.

Guidelines for Quarterly Reports

There are required components that are standard across the board for quarterly reports, but the specifics of what is included in each company's report may vary. A quarterly report includes the executive overview, the aims and objectives, the highlights, and the new and continuing issues. Regarding the difficulties encountered, the quarterly report may contain methods that have been developed or are currently being implemented to conquer them. If it is pertinent, the quarterly report may review the data from the preceding quarterly reports and compare those reports and the report that is now being discussed.

Preparing a quarterly report takes significant time and may call for extensive research. In general, ensuring that as much information as possible is included in the quarterly report may be accomplished by collecting financial and performance data from various sources. In addition to providing a graphical representation of the presented data, spreadsheets and graphs also help to offer context for the information. Investors and analysts can more accurately assess a company's state by using the information that is provided in quarterly reports, which detail the performance of the business.

The Benefits of Quarterly Reporting

Some potential benefits for a business from publishing a quarterly report are as follows:

Enables Organizations to Evaluate Reports

When corporations use quarterly reports, they can compare previous reports with more current ones. The ability to track and evaluate the increase in financial resources is provided to businesses. If a company wants to evaluate its progress over a longer period of time, it may retrieve financial records from an earlier year, while if it wants to evaluate its development over a shorter period of time, it can examine financial information from an earlier sales period.

Helps organizations define and measure goals

Quarterly reports allow businesses to set objectives and keep regular tabs on their performance assessment. Most businesses may have an easier time monitoring their financial performance and achieving their goals since they issue quarterly reports throughout the year. During one quarter, a company may recognize problems with its overall financial performance. Once these problems have been identified, the company might establish a target to achieve during the final quarter.

Enhances management's credibility among stakeholders

It is common practice for businesses to make copies of their quarterly report available to various stakeholders. This enables enterprises to demonstrate to stakeholders the current financial status of a business, in addition to providing particular facts about the income and profit of the organization. Providing shareholders with the quarterly report can potentially increase the level of participation from investors.

Encourages potential new investors

Companies that want to attract investors should make copies of their quarterly reports available to anybody interested. The likelihood that stakeholders will invest in a company increases if its most recent report reveals that it has maintained its expansion while also posting high levels of profit and sales. When evaluating investment prospects, prospective stakeholders might look at online versions of quarterly reports that businesses have made accessible to the public.

The drawbacks of a quarterly report

The use of quarterly reports may provide many advantages to organizations, but preparing and reviewing these reports can present some difficulties for certain companies. The following is a list of some of the drawbacks associated with quarterly reports:

Uses a shorter sales period

Since there is a smaller window of time to evaluate performance, adopting quarterly reports may provide a greater challenge for firms when attempting to evaluate their progress. An annual report, which measures a company's financial success over a complete sales year as opposed to a quarterly report, may be used if the company is interested in getting a more holistic picture of its financial performance. Companies may get a clearer picture of their progress toward their objectives and measurements by analyzing quarterly and annual reports.

Shows lower sales

The poor statistics may be reflected in the quarterly report if a corporation has lower sales figures or fewer profits than the previous sales period. Even if the quarterly sales don't provide any insight into the explanation for the low figures, stakeholders could get the impression that a firm is losing sales because of the low statistics. Typically, the low numbers are caused by marketing adjustments that may produce sales fluctuations.

For instance, a retailer focusing on winter apparel probably sees fewer customers in the summer. As a result, their quarterly report would indicate that their sales are beginning to decline. It is possible that stakeholders may not have any insight into the reason for the reduced sales, which may lead to a loss of trust in the store's ability to sell products. You may, however, give individuals who read your quarterly report insight into your workplace's sales talents by explaining the cause for changing sales and including that explanation in your report.

Requires extensive time to create

The resources needed to compile and submit quarterly reports vary widely from one business to the next. They may entail, among other things, collecting financial data from many divisions and consolidating it into a single report. When there are many incomes, cash flows, and financial statements for a single firm, it may take the company's financial specialists more time to aggregate all of the information. Software may be available to businesses that streamline the process of creating quarterly reports by allowing users to download and import data into a single document.

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