Commercial Year

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Year

    A period of time that is comprised of 12 consecutive months. ...
  2. Fiscal Year - FY

    A period that a company or government uses for accounting purposes ...
  3. Tax Year

    The period of time which is covered by a particular tax return. ...
  4. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial ...
  5. Fiscal Year-End

    The completion of a one-year, or 12-month, accounting period. ...
  6. Last Fiscal Year - LFY

    The most recent 12-month accounting period that a business uses ...
Related Articles
  1. Investing Basics

    12 Things You Need To Know About Financial Statements

    Discover how to keep score of companies to increase your chances of choosing a winner.
  2. Personal Finance

    Breaking Down The Balance Sheet

    Knowing what the company's financial statements mean will help you to analyze your investments.
  3. Quality financial reports allow for effective, informative fundamental analysis.
    Investing Basics

    The Importance Of Corporate Transparency

    Clear and honest financial statements not only reflect value, they also help ensure it.
  4. how to read a company's footnotes.
    Fundamental Analysis

    Financial Footnotes: Start Reading The Fine Print

    Find out what could be hidden in this often-overlooked part of the financial statements.
  5. Active Trading Fundamentals

    Evaluating A Company's Management

    Financial statements don't tell you everything about a company's health. Investigate the management behind the numbers!
  6. As the number of new employees increases, the marginal product of an additional employee will at some point be less.
    Investing

    More is Less: Diminishing Marginal Returns

    In formal economic terms, the law of diminishing marginal returns states that as the number of new employees increases, the marginal product of an additional employee will at some point be less ...
  7. Typically, SPEs are subsidiaries of a larger corporation.
    Investing

    How Special Purpose Entities Help Fight Risk

    A special purpose entity, sometimes called a special purpose vehicle, is a legal entity created for one very limited, particular task. Typically, SPEs are subsidiaries of a larger corporation.
  8. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
    Professionals

    What is a SWOT Analysis?

    SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a management tool used to identify strategies for success. It may be used to guide individual thinking, group ...
  9. Accounting is the recording of financial transactions of a business or organization.
    Professionals

    What is Accounting?

    Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements.
  10. What's a Multinational Corporation?
    Investing

    What's a Multinational Corporation?

    A multinational corporation is just that – a corporation that operates in multiple nations, with a home office that coordinates global management. Being a multinational corporation is a complicated ...

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center