Quarterly statements: Overview, definition, and example
What are quarterly statements?
Quarterly statements are financial reports issued by companies or organizations every three months, summarizing their financial performance, activities, and financial position over the previous quarter. These statements typically include key financial information such as revenues, expenses, profits, assets, liabilities, and cash flow. Quarterly statements are a standard part of corporate financial reporting, especially for publicly traded companies, and are often required by regulatory bodies such as the Securities and Exchange Commission (SEC).
Quarterly statements are usually presented in the form of quarterly earnings reports or financial statements, and they allow stakeholders, such as investors, creditors, and analysts, to assess the company’s financial health and performance in shorter intervals throughout the year.
Why are quarterly statements important?
Quarterly statements are important because they provide regular, up-to-date financial information to stakeholders, allowing them to monitor the company’s performance, track financial trends, and make informed decisions. For investors, these reports help evaluate whether the company is meeting expectations, achieving growth, or experiencing financial difficulties.
For companies, quarterly statements are an essential tool for maintaining transparency, compliance with financial reporting regulations, and trust with investors and the public. They also serve as a tool for management to review progress, identify areas for improvement, and adjust strategies as necessary.
Understanding quarterly statements through an example
A publicly traded tech company releases its quarterly statement for Q1 of the year. The statement includes a summary of the company’s revenue from product sales, operating costs, net income, and any changes in assets or liabilities. The company reports a 10% increase in revenue compared to the same quarter of the previous year, but also notes an increase in operating expenses due to the launch of a new product line. Investors use this information to assess the company's growth and potential future profitability.
In another example, a manufacturing company releases its quarterly statement, which shows a decline in revenue due to supply chain disruptions. The company addresses this issue in the report and provides guidance on how it plans to recover in the upcoming quarters. The statement also includes an update on the company’s efforts to reduce costs and improve operational efficiency.
An example of quarterly statements clause
Here’s how this type of clause might appear in a corporate governance document or financial agreement:
“The Company shall prepare and deliver quarterly financial statements, which shall include a balance sheet, income statement, and cash flow statement, to all shareholders within 30 days of the end of each fiscal quarter. These statements will provide a detailed overview of the Company’s financial performance, including any material changes in its financial position or business operations.”
Conclusion
Quarterly statements are a vital aspect of financial transparency and corporate governance, offering a snapshot of a company's financial performance and position over three-month periods. These reports allow investors, analysts, and stakeholders to track the company’s progress, make data-driven decisions, and monitor compliance with financial regulations. For companies, regular quarterly statements provide an opportunity to assess financial health, address challenges, and adjust strategies to stay on track with long-term objectives.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.