What is a fiscal year?

A fiscal year refers to a one-year period that organizations use for financial reporting and budgeting purposes. It can begin and end at any time and does not necessarily align with the calendar year, which runs from January 1 to December 31. The specific choice of fiscal year can vary by organization and is often selected to reflect their operational patterns, business cycles, or regulatory requirements. By using a fiscal year, companies can provide a clear picture of their financial performance over that period, making it easier to manage finances, assess business strategy, and report to stakeholders.

The other options do not accurately describe a fiscal year: a calendar year pertains to a fixed January-to-December framework used primarily for tax purposes; a quarter refers to a three-month segment within a fiscal or calendar year; and a timeline for employee performance reviews relates to human resources processes rather than financial reporting. Each of these definitions serves a different function and does not encapsulate the broad scope of a fiscal year.