What Is a Quarter? Definition, Meaning & Example

KEY TAKEAWAYS

• A quarter in financing refers to a period of three months.
• This period serves as ¼ of the calendar year.
• It allows for easy creation of payment plans, repayment periods, and more.
• Many businesses release quarterly reports.
• Some submit an annual report to track revenue growth.
• The IRS also functions on a quarterly basis.

What Is a Quarter?

A quarter is a period of three months. So, if you finance a car in the current quarter, you’ll make payments for three months and then have another three months to pay off the loan. With a lot of financing options, there are pros and cons to each one.

The quarter option is the one with the fewest disadvantages, which means a dealer might be more likely to suggest it.

The payment terms will often be smaller than for other options because you’re putting less money down and paying less interest. On average, financing in the previous quarter may lower your payment by about $50 per month.

Be sure to discuss each option for the fiscal quarter. Each calendar quarter may benefit you over another. Moreover, you can make quarter assessments to ensure which is right for you. 

An advisor can help you with a quarter comparison to see which one aligns with your payment schedule.

Types of Quarters

There are two types of quarters: federal quarters and state quarters. The federal government uses them for tax reporting and budgeting purposes. State governments use them for tax reporting and budgeting purposes.

Federal Quarters

The four federal quarters are January-March, April-June, July-September, and October-December. The first federal quarter of the year is January 1 to March 31. The second federal quarter of the year is April 1 to June 30. The third federal quarter of the year is July 1 to September 30. The fourth and final federal quarter of the year is October 1 to December 31.

State Quarters

State quarters are similar to federal quarters. But they’re used by state governments for tax reporting and budgeting purposes. The four state quarters are January-March, April-June, July-September, and October-December. 

The first state quarter of the year is January 1 to March 31. The second state quarter of the year is April 1 to June 30. The third state quarter of the year is July 1 to September 30. The fourth and final state quarter of the year is October 1 to December 31.

Quarter Systems

A company’s financial reporting schedule determines fiscal quarters. For instance, a retailer that operates on a fiscal year ending in January will have its first fiscal quarter ending April 30.

Its second fiscal quarter ending July 31, its third fiscal quarter ending October 31, and its fourth fiscal quarter ending January 31.

There are two types of quarters: calendar and fiscal. A calendar quarter is three months long and always refers to the same months every year.

The first calendar quarter is January through March. The second is April through June, the third is July through September, and the fourth is October through December. Fiscal quarters can be either 13 or 14 weeks long and their start and end dates vary from year to year.

Sequential Quarters

When a company reports its financial results for each quarter, it’s important to note whether the quarters are sequential or not. Sequential quarters are those that follow one another in chronological order. Non-sequential quarters, on the other hand, do not follow one another chronologically. Instead, they’re reported side-by-side so that investors can compare them.

For example, let’s say Company XYZ has a fiscal year that ends on December 31. Its first quarter would be January 1 through March 31 (a calendar quarter).

Its second quarter would be April 1 through June 30 (also a calendar quarter). And its third and fourth quarters would be July 1 through September 30 and October 1 through December 31, respectively.

Rear Quarter

A rear quarter is the last three months of a company’s fiscal year. The rear quarter for a retailer with a fiscal year ending in January would be October, November, and December. For a retailer with a fiscal year ending in February, the rear quarter would be November, December, and January.

The term “rear quarter” is often used interchangeably with “fourth quarter.” However, there is a slight difference between the two. The fourth quarter refers to the final three months of a calendar year, regardless of when a company’s fiscal year ends. So, for example, the fourth quarter of 2020 would be October, November, and December, even for retailers with fiscal years that end in January 2021.

Quarter Period

A quarter period is the time frame during which a company’s fiscal quarters fall. If a company has a fiscal year that ends on December 31, its first quarter period would be January 1 through March 31.

Its second quarter period would be April 1 through June 30. And its third and fourth quarter periods would be July 1 through September 30 and October 1 through December 31, respectively.

The term “quarter period” relates to “fiscal quarter.” A fiscal quarter always refers to three months (i.e., one-fourth of a year). A quarter period can be either three or four months long, depending on the company’s financial reporting schedule.

Slow Quarters

A slow quarter is a three-month period during which a company’s revenue and/or profit growth slows down. This can be due to a variety of factors, such as seasonal fluctuations, an economic downturn, or increased competition.

Slow quarters are often referred to as “soft quarters.” A soft quarter is one in which a company’s revenue and/or profit growth slows down, but it still meets analyst expectations. A slow quarter, on the other hand, is one in which a company’s revenue and/or profit growth falls short of analyst expectations.

Some companies experience more slow quarters than others. For example, retailers have slow quarters in the months leading up to Christmas. Consumers rein in their spending in preparation for the holidays.

Summary

A fiscal quarter is a three-month period used by companies and investors for financial reporting purposes. Fiscal quarters are denoted by the months they fall in, such as “Q1” for January through March or “Q2” for April through June.

There are four fiscal quarters in a year: Q1, Q2, Q3, and Q4. The first quarter is often the busiest for companies. It includes the all-important year-end and holiday shopping season.