Fiscal year

In the United States most CORPORATIONs are legally required to report the results of their business activities at least once a year. In their initial INCORPORATION documents, companies define when their business year starts and ends; this is their fiscal year. Some retail businesses end their business year at the end of January, corresponding to the end of the holiday sales season. Companies usually also conduct inventories at the end of each fiscal year. The U.S. government begins their fiscal year on October 1. Many U.S. agencies engage in a flurry of PURCHASING just before the end of the government’s fiscal year, and frequently Congress and the executive branch will fail to pass spending legislation in time for the beginning of the next fiscal year. In those years government agencies will be allocated funds based on the previous fiscal year’s budget. State governments also have varying fiscal years, with many states starting new budget years in July. In recent years STOCK MARKET watchers have closely scrutinized the quarterly earnings reports of leading companies. The release of quarterly earnings statements are tied to corporations’ fiscal years, which is why the statements do not all appear at the same time. When a leading company in any industry reports unexpectedly high or low earnings, the stocks of other companies in the same industry are usually affected by the one company’s report.