Quarter - Q1, Q2, Q3, Q4

Loading the player...

What is a 'Quarter - Q1, Q2, Q3, Q4'

A quarter (Q1, Q2, Q3, Q4) is a three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends. A quarter refers to one-fourth of a year and is typically expressed as "Q." The four quarters that make up the year are: January, February and March (Q1); April, May and June (Q2); July, August and September (Q3); and October, November and December (Q4). A quarter is often shown with its relevant year, as in Q1 2015 or Q1/15, which represents the first quarter of the year 2015.

BREAKING DOWN 'Quarter - Q1, Q2, Q3, Q4'

All public companies in the United States must file quarterly reports (known as 10-Qs) with the U.S. Securities and Exchange Commission (SEC) at the end of each quarter. Each 10-Q contains the public company's unaudited financial statements and company operations information for the previous three months (quarter). 10-Qs are required for the first three quarters of the year. Each publicly traded company must also file an annual report, known as a 10-K, which accounts for the first three quarters with 10-Q reports, as well as the fourth quarter, and will often contain much more detailed information about the company than 10-Ks do.

Companies, investors and analysts often use data from different quarters to make comparisons and evaluate trends. Because there are four quarters in a year, one may evaluate a company’s performance over time with a much higher degree of specificity than if one were doing so on a yearly basis. For instance, an investor may track a company’s performance over the last eight quarters to determine if the company is consistently performing well. Certain businesses or industries, however, may often vary in performance on a seasonal basis. For example, one may expect that an ice cream or smoothie company will do the most business during the summer (quarter 2 and/or 3), so an investor might track these companies’ performance over the past few Q3s for a better view of their progress than if the investor were looking at all four quarters of the year.

On the other hand, many retail companies see a spike in business during the holiday season (Q4), so if one were tracking the performance of retail companies, comparing the performance of recent fourth quarters may be a good decision. Box-office ticket sales are particularly tied to the time of year, with the vast majority of sales taking place in the summer and during the holiday season, with the beginning of the year and the early months of fall traditionally seeing very low sales. Yet, how seasonal companies perform during off-seasons is also very important to consider, as most companies in seasonal industries are active year-round.

Quarterly reports are often an important time for publicly traded companies, as these earnings reports may significantly affect the value of a company’s stock. If a company has had a good quarter, its stock value may increase, but if the company has had a poor quarter the value of its stock may decrease. Analysts’ expectations may come into play here too. If a company’s earnings per share during any particular quarter is higher than predicted by analysts, the company’s stock will likely increase in value, and will likely decrease in value if its earnings per share is less than predicted.

While all companies use this uniform quarter standard, certain governments use different systems. For example, the first quarter of the United States federal government’s fiscal year is October, November and December, Q2 is January, February and March, Q3 is April, May and June, and Q4 is July, August and September. State governments, on the other hand, may decide their own fiscal calendars.

RELATED TERMS
  1. Quarter On Quarter - QOQ

    A measuring technique that calculates the change between one ...
  2. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. ...
  3. Quarterly Revenue Growth

    An increase of a company's sales when compared to a previous ...
  4. MJSD

    An acronym that represents the months March, June, September ...
  5. Quarter To Date - QTD

    A time interval that captures all relevant company activity that ...
  6. Year Over Year - YOY

    A method of evaluating two or more measured events to compare ...
Related Articles
  1. Insights

    Is It Time To End Quarterly Earnings Reporting?

    The chorus for removing the quarterly earnings requirement for companies is growing louder. We examine the pros and cons of the issue.
  2. Markets

    VCs Invest $12.1 Billion on Startups in Q1

    Venture Capitalists invested $12.1 Billion in 969 capital deals last quarter.
  3. Investing

    6 Things To Look For In Earnings Reports

    Learn how to consider all the known variables when assessing a company's health.
  4. Markets

    Discover Financial Services' Fourth Quarter Earnings Report

    Discover Financial Services (NYSE:DFS) announced its results for the most recent quarter on December 20, 2012. Discover Financial Services is a credit card issuer in the United States and an ...
  5. Markets

    The Flow Of Company Information

    Learn how to gather all the pieces before you start to put together your puzzle.
  6. Managing Wealth

    How to Think About Seasonality Trends

    Investors benefit when company research incorporates seasonality trends that predict relative strength and weakness throughout the calendar year.
  7. Markets

    Stock and Flow Variables Explained: A Closer Look at Apple

    The difference between stock and flow variables is an essential concept in finance and economics. We illustrate with financial statements from Apple Inc.
  8. Markets

    General Electric Second Quarter Earnings Preview

    General Electric (NYSE:GE) is expected to report increased earnings when it releases its second quarter results on Friday, July 20, 2012. The consensus estimate is anticipating a profit of 37 ...
  9. Investing

    How To Decode A Company’s Earnings Reports

    Earnings reports tell investors how a publicly-traded company is performing, but aren’t always easy to decipher.
  10. Investing

    4 Things To Know About Earnings Season

    Investors should know that earnings reports are not just about the earnings.
RELATED FAQS
  1. When does Q2 start for most companies?

    Learn about the fiscal year of different companies and when the second quarter begins. Explore why analysts often prefer ... Read Answer >>
  2. What is the difference between a quarter and a year in finance?

    Examine the difference between a fiscal quarter and a fiscal year. Learn why investors examine both quarterly and annual ... Read Answer >>
  3. What is the first day of the first quarter?

    The first day of companies' fiscal years varies based on industry cycles. The timing is especially important because annual ... Read Answer >>
  4. What is the first day of the quarter?

    Learn when the first day of the quarter is. Explore why investors and analysts prefer to compare results year-over-year due ... Read Answer >>
  5. When is earnings season?

    Earnings season is the period of time during which a large number of publicly traded companies release their quarterly earning ... Read Answer >>
  6. Why do companies postpone earnings announcements?

    During the course of a fiscal year, a company will report earnings on a total of four separate occasions: three quarterly ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center