Fiscal Year (FY)
Definition of 'Fiscal Year (FY)'
There are several reasons why organizations use fiscal years. First, it allows them to compare their financial results from one year to the next. This can help them to track their progress and make informed decisions about their business. Second, it helps them to comply with government regulations. For example, the federal government requires all businesses to file their taxes based on their fiscal year. Third, it can help them to manage their cash flow. By knowing when their peak and off-peak periods are, they can better plan for their cash needs.
There are a few things to keep in mind when using fiscal years. First, it is important to make sure that all of your financial records are kept for the entire fiscal year. This includes all of your income, expenses, assets, and liabilities. Second, it is important to make sure that you are consistent in the way that you calculate your financial results. This means using the same accounting methods and principles from year to year. Third, it is important to be aware of the different fiscal year start and end dates that are used by different organizations. This can help you to avoid confusion when comparing your financial results to those of other organizations.
Overall, fiscal years are a useful tool for businesses and organizations to track their financial performance. By understanding how fiscal years work, you can better manage your cash flow, comply with government regulations, and make informed decisions about your business.
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