Understanding & Preparing Quarterly Financial Reports

Publicly traded companies are required to file certain documents with the Securities and Exchange Commission (SEC). One such document is the quarterly financial report. Discover what goes into a quarterly financial report, when it's due and how to file it.

As the name suggests, quarterly reports are due every quarter, or three months. These reports are submitted online using what's known as an SEC Form 10-Q.

These reports not only summarize the previous three months of financial figures, they compare present and historical financial performance. Companies must show how the current quarter compares with the same quarter last year.

These reports also present a rolling tally of year-to-date financial performances. The third quarter report will show the performance from Q1 and Q2 in the year-to-date section, give the full numbers from Q3 of the present year, and compare this year's Q3 with last year's Q3, for instance.

What Is a Quarterly Financial Report?

As mentioned, a quarterly financial report gives the full financial portrait of the quarter, or three-month period.

Quarterly reports are unaudited. They are intended as a snapshot of financial data. These reports typically include a company's profit, expenses, cash flow and gross revenue.

When Are Quarterly Financial Reports Due?

Quarterly financial reports are due within a few weeks of the quarter's close.

Most companies operate using the calendar year that runs from January 1 to December 31. For these companies, the quarters will run as follows:

• Q1: January 1 - March 31
• Q2: April 1 - June 30
• Q3: July 1 - September 30
• Q4: October 1 - December 31

For a company that follows this calendar system, the quarterly report is then due a couple of weeks into the following quarter, for example, on April 15, July 15, October 15 or January 15, respectively.

What if the company has a different financial calendar?

The deadlines for filing quarterly reports will naturally be different for a company that does not operate on the calendar year. Remember the general rule of "a few weeks after the quarter closes" and you'll be fine.

How to Prepare a Quarterly Financial Report

Now that you know when are quarterly reports due and what form to use, how should they be prepared?

The first step is to gather all the necessary financial forms. Most companies will want to have income statements, balance sheets and cash flow statements on hand.

These documents contain the raw numbers that tell the financial story of the quarter.

A quick glance at the 10-Q form shows that companies report more than just numbers in a quarterly financial report. A section known as the analysis of financial condition and results of operations provides the opportunity to put the numbers in the context of the company's goals, objectives and challenges. If the quarter was not as profitable as hoped, this is the chance to explain why. If the quarter exceeded expectations, this section can be used to discuss the strong performance and talk about next steps.

The quarterly report can draw parallels between previous performance and current performance by drawing on the historical data that is included.

It can be time-consuming to run all the necessary reports and write the narrative that adds context. Plan ahead and leave plenty of time to put the report together, to avoid rushing at the end or overlooking something.

Requirements for Quarterly Report

Quarterly report requirements include:

• Gross revenue, expenses, cash flow and net profits for the quarter
• Gross revenue, expenses, cash flow and net profits from this same quarter last year
• Year-to-date financial data on gross revenue, expenses, cash flow and net profits
• Contextual information, as mentioned above

To make the report more digestible, many companies use charts, graphs and other data visualizations.

While these are not strictly required, many companies include an executive summary that is an overview of the report as a whole. They also include key performance indicators, or the numbers that best tell the story of the quarter. They add context by going into detail on the business goals, highlights of the quarter and future desired growth.

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