Definition: Fiscal year end (FYE) indicates the date when a business’ operating cycle is finished and public companies are required to publish their annual financial statements based on the preceding 12-month accounting period.
What Does Fiscal Year End Mean?
What is the definition of fiscal year end? A fiscal year-end is different than the calendar year, and therefore, is not always the same for all the companies. Most companies’ fiscal years, however, do follow the calendar year and end on December 31.
Some companies, on the other hand, have odd year-ends that line up with their operating cycle instead of the calendar year. For example, some companies run their fiscal year from Apr 1st to March 31. This type of treatment is common in the retail industry because they don’t want to close their books during their busiest time of year. Thus, they push their year-end back to March well after the holiday season.
Nevertheless, at the end of the year, listed companies are required to submit their financial statements to the Securities and Exchange Commission (SEC) for review. The year-end financial statements provide investors with an idea of the firm’s annual performance with respect to the previous years.
Let’s look at an example.
Example
Company X reports its annual financial statement on December 31st. The account manager has asked his assistant to prepare a breakdown with the company’s key financial indicators so that he sees how the company performed YoY comparing its fourth quarter and fiscal year.
The assistant prepares the following table:
At the end of the fiscal year 2015, Company X reports strong financial results, $32.9 million in revenues (32.9% increase YoY), $5.4 million in operating cash flow (28.6% increase YoY), and $1.25 million in net income (27.6% increase YoY). The increase in these accounts suggests that Company X is a financially healthy company with effective operations management. Furthermore, the company reports $65.4 million in cash and cash equivalents, a 12% increase YoY.
In the fourth quarter of 2015, Company X also reports strong financial results, which further sustain the fact that the company is growth-oriented and financially solvent.
Summary Definition
Define Fiscal Year End: FYE means the time when a company’s operating cycle ends, their books are closed, and financial statements are issued.
