Commercial Year

DEFINITION of 'Commercial Year'

A commercial year is a 360 day year composed of 12 months with each lasting 30 days. The commercial year adjusts for differences in the number of days in each calendar month, making it easier to track changes in a business.

BREAKING DOWN 'Commercial Year'

A common application for using a commercial year can be found in the retail sector. If a manager wishes to understand changes in the revenues of stores from month to month, using a calendar year may obscure economic reality. For example, sales for January could be higher than sales in February simply because there are more days in January than in February. Thus, a manager would prefer to see results in 30 day increments to evaluate the true extent of any change in business.

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