Understanding a Quarterly Financial Report and Its Requirements

What Is a Quarterly Report?

A quarterly report is a summary or collection of unaudited financial statements, such as balance sheets, income statements, and cash flow statements, issued by companies every quarter (three months). In addition to reporting quarterly figures, these statements may also provide year-to-date and comparative (e.g., last year's quarter to this year's quarter) results. Publicly-traded companies must file their reports with the Securities Exchange Committee (SEC).

Most companies have an accounting period that ends with the calendar year: Dec. 31 and quarters that end on March 31, June 30, September 30, and December 31. Quarterly reports are typically filed within a few weeks of a quarter's end.

However, some companies follow a different financial calendar and report year-end figures at different times. For example, Apple Inc.'s (AAPL) financial or fiscal year runs from October through September of the following year. See below how the quarterly reporting cycle differs.

Understanding Quarterly Reports

Quarterly reports include key accounting and financial data for a company, including gross revenue, net profit, operational expenses, and cash flow. The Securities and Exchange Commission (SEC) requires issuers of publicly traded shares to file annual reports on Form 10-K and quarterly reports on Form 10-Q within 60 days of the end of the applicable period. These forms may include more detail than quarterly and annual reports.

Quarterly reports are usually accompanied by presentations from a company's management where key performance indicator data are presented to investors and analysts. Management of firms often provides guidance for future financial results, as well. These presentations are routinely followed by question and answer periods.

Analysts following companies often publish estimates of key metrics for future reporting periods. Financial publications average these estimates to arrive at street consensus estimates. Companies that exceed these estimates are said to have beaten expectations. Companies whose performances are in-line with estimates are said to have met expectations. Companies whose results are below estimates are said to have missed expectations.

Requirements for Quarterly Reports

Although what's included in a quarterly report varies among companies, there are features common to most. A quarterly report typically includes an executive summary, goals and objectives, highlights, and new and ongoing challenges. In terms of challenges, the quarterly report may include strategies planned or employed to overcome them. If relevant, the quarterly report may discuss previous quarterly reports' data and provide a comparison between them and the current report.

Preparing a quarterly report takes time and may require extended research. Gathering financial and performance data from various sources will generally ensure that the quarterly report is as comprehensive as possible. Graphs and spreadsheets provide a visual representation of the data provided; they help to add context. Quarterly reports help investors and analysts gauge the health of a company by providing insight into a firm's performance.