Reporting Period

Businesses measure their performance over set periods so that results can be compared over time. The income statement and cash flow statement cover a reporting period, while the balance sheet shows the position at the end of it.

Public companies typically report annually and, in many countries, also quarterly or half-yearly. Internally, most businesses prepare monthly reports so managers can spot problems early.

Choosing consistent reporting periods matters. Comparing a three-month period with a twelve-month one would be meaningless, and comparing a busy holiday quarter with a quiet one can be misleading. Analysts therefore often compare a quarter with the same quarter in the previous year.

Under accrual accounting, much of the work at the end of each reporting period involves making sure income and expenses are recorded in the right period. A sale delivered on the last day of the period belongs in that period, even if the invoice is paid later.