Loading the player...

DEFINITION of 'Quarter - Q1, Q2, Q3, Q4'

A quarter is a three-month period on a company's 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 standard 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-Qs do.

[ Quarterly financial statements are essential reading for long-term investors. By looking at these financial statements, investors can determine the health of a company and its potential valuation. Investopedia's Fundamental Analysis Course provides an in-depth overview of the subject. You'll learn how to read financial statements, interpret financial ratios, and use the same strategies as financial professionals in over five hours of on-demand video, exercises, and interactive content. ]

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 bring in more revenues during the summer (quarter 2 and/or 3). Therefore, an investor might track this company’s 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.

Likewise, 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 fourth quarters in the last couple of years may be a good decision. Box-office ticket sales are particularly tied to the time of year when 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 report periods 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 (EPS) 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.

Non-Standard Quarters

Not all companies use the uniform quarter standard. For example, Wal-Mart Stores' first quarter is February, March, and April; Apple Inc's Q1 is October, November, and December; Microsoft Corporation's Q1 is July, August, and September; etc. In addition, certain governments use different quarter 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, also, may have their own fiscal calendars.

RELATED TERMS
  1. Quarter Over Quarter - Q/Q

    Quarter over quarter (Q/Q) is a measure of an investment's or ...
  2. SEC Form 10-Q

    SEC form 10-Q is a comprehensive report of a company's performance ...
  3. Seasonality

    A characteristic of a time series in which the data experiences ...
  4. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial ...
  5. Income Statement

    An income statement is one of the three major financial statements ...
  6. Year

    A year is a 12-month period whose start date can vary.
Related Articles
  1. Investing

    What's a Quarter?

    A quarter, often abbreviated “Q,” is a consecutive three-month period that a company uses to report its earnings and dividends.
  2. Investing

    6 Things To Look For In Earnings Reports

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

    How To Decode A Company's Earnings Reports

    Read between the lines to decipher a company's true financial condition.
  4. Managing Wealth

    How to Use Earnings Season to Make Better Decisions

    Earnings season reflects the state of the stock market, but also demonstrates how the overall economy is performing.
  5. Investing

    The Flow of Company Information

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

    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.
  7. Investing

    4 Things To Know About Earnings Season

    Investors should know that earnings reports are not just about the earnings.
  8. Investing

    SEC Filings: Forms You Need To Know

    The forms companies are required to file provide a clear view of their histories and progress.
  9. Investing

    Understanding The Top SEC filing forms

    It's easier than ever to keep track of your SEC filing status online.
RELATED FAQS
  1. 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 >>
  2. When does Q4 start and finish?

    Learn about different financial years used by various companies. Explore when the fourth quarter begins on October 1st and ... Read Answer >>
  3. Why Do Companies Postpone Earnings Announcements?

    Learn the reasons why a company may choose to delay their scheduled earnings release. Determine what an investor should do ... Read Answer >>
  4. What does the end of the quarter mean for portfolio management?

    Take a deeper look at why the end of a financial quarter, and all of its accompanying reports, is a significant event for ... Read Answer >>
  5. What is the first day of the third quarter?

    Learn when the first day of the third quarter begins. Explore how reported financial results may have a profound impact on ... Read Answer >>
  6. When must a company announce earnings?

    The Securities & Exchange Commission (SEC) requires companies to file earnings reports no later than 45 days after the end ... Read Answer >>
Hot Definitions
  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  2. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  3. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  4. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  5. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  6. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
Trading Center