Quarterly Report

Quarterly reports are unaudited financial reports that are summarized versions of financial statements released by public companies every three months (quarter) to adhere to compliance requirements. These reports help in the reduction of information asymmetry and the reduction of the probability of any potential window dressing. Publicly listed companies are directed by the Securities Exchange Commission (SEC) to fill out the quarterly report form 10Q.

In this report, information pertaining to the highlights of the three months of business, executive summary, future plans, and objectives are made available to the shareholders and regulatory authorities for assessment of performance in comparison to previous quarters. Moreover, companies can also disclose the challenges they are facing and the strategies applied to tackle them.

• . Quarterly reports are unaudited financial summaries of financial statements issued by public businesses every three months (quarter) to fulfill compliance requirements. These reports help to eliminate information asymmetry and the risk of window dressing.
• Anyone interested in these reports can obtain them from the SEC, as the quarterly reports can be found as 10Q via the SEC's EDGAR section.
• The quarterly reports are submitted per Article 41 of the listing agreement within 45 days after the quarter's conclusion. It should include the current Quarter, comparable Quarter, and year-to-date numbers. In addition, it should show total gross revenue, operating expenditures, cash flow, and net profits.

Quarterly reports are the financial and overall performance report of a company published every three months as directed by the Securities and Exchange Commission (SEC). These reports include executive summary, performance, report, future plans, and strategies. Publicly listed companies are directed to fill a 10-Q form to declare this report on or before the quarterly report date. Let us understand how it works through the pointers below.

• These reports are filed with the Securities and exchange commission.
• These usually are unaudited reports.
• Such figures may be utilized for comparative analysis.
• It can be utilized to assess the year-to-date performance of the company.
• All publicly listed companies have to file quarterly reports with the Securities and exchange commission as a compliance requirement.
• For non-listed companies, the key stakeholders can request the release of such reports from the investor relations committee. Typically, the profit and loss statements are not readily available for public viewing.
• Usually, a stakeholder or an investor can access these reports from the securities and exchange commission.
• They are available as Form 10Q under the Securities and exchange commission.
• Similarly, the annual reports are available as 10K reports.
• Therefore, the investor or an analyst can visit the electronic data gathering, analysis, and retrieval systems or the EDGAR of the SEC to access the 10Q.
• They have to pass the company's name in the search box of EDGAR.

The quarterly reports are unaudited financial statements released at every quarter-end. These reports are fairly different from annual reports. Such reports help in releasing information that helps promote investor confidence in the business. Any stakeholder keen to access these reports can download the reports from the SEC as the quarterly reports are available as 10Q under the EDGAR section of the SEC.

Let understand the requirements for a publicly listed company while filling out the quarterly report form. While the information in the declaration varies from company to company. However, there are a certain set of requirements published by the SEC that all companies must comply with. Let us understand them through the explanation below.

• The quarterly reports are filed as per clause 41 of the listing agreement.
• The reports should be filed from the quarter-end and at the end of 45 days.
• The report should be composed of the current Quarter, comparable Quarter, and year-to-date figures.
• It should report total gross revenue, operational expenses, cash flow, and net profits.

Before the quarterly report date, a company must ensure all the required data is gathered and compiled in the format required by the SEC. This task is often delegated to one of the executives in coordination with a company secretary and the auditor to ensure an error-free report.

1. It should cover a brief message from the board of directors to be shared with the stakeholders.
2. They should highlight the performance of the Quarter ending financials.
3. It should provide a balance sheet.
4. It should provide an income statement and statement of cash flows.

Given the importance of quarterly reports in providing stakeholders with crucial insights, having the report professionally edited is essential. Professional editing services can help ensure the report is clear, consistent, and free from errors in grammar, figures, or formatting. This not only enhances the report's credibility but also ensures compliance with regulatory requirements. A well-edited report reflects positively on the company’s professionalism and attention to detail, which can boost investor confidence.

Let us understand the concept of quarterly report form and other related details with the help of a couple of examples. These examples will help us understand the intricacies of the concept.

Example #1

XYZ credit agency is planning to release its quarterly report for the First Quarter. It has asked its company secretary to prepare a draft of this report. All the financial details have been shared with the XYZ credit agency. Help the company secretary to prepare this report.

Message from the board,

The board of directors has approved the release of unaudited financial statements for the Quarter ending 31/03/2019. The board feels happy to share financials with positive numbers with the stakeholders. They have taken up additional strategic initiatives that would further help improve the business's financial conditions.

For Quarter ending 1, the balance sheet is as follows: –

Example #2

In May 2023, the entertainment giant Walt Disney Co. declared their quarterly results and decided to declare their performance across different revenue streams. For instance, their losses in the streaming sector, Disney + were reduced by 26% percent by approximately $200 million.

Parallelly, their streaming platform’s subscribers shrunk by 8%. As on April 1, 2023, their global subscribers were at 157.8 million, which is reduced by 4 million in comparison to the previous quarter.

However, their overall revenue increased by 13% to $21.8 billion.

Let us understand the impact of a quarterly report date on the share price and the morale of shareholders and employees of the company through the points below.

• As per the compliance requirements of federal securities laws, publicly traded entities have to release financial information annually and quarterly.
• Such disclosures help in driving transparency among different stakeholders.
• Comprehensive prepared financial statements drive accountability and help the financial markets operate efficiently.
• The release of such information at periodic intervals helps curb information asymmetry and insider trading.
• The release of such reports helps prospective investors to decide whether they should invest in such a business or not.
• Since these reports are to be prepared in line with the compliance requirements of the federal laws, such reports are standardized and easy for laymen to understand.
• As a compliance requirement, the quarterly reports must be filed within 45 days with each quarter-end.
• It ensures that stakeholders have prompt access to crucial information, and they can easily drive critical decision-making for themselves.
• It ensures the reduction in volatility that comes into the picture of price-sensitive entities.
• Such practices enhance investor confidence and reduce the competitive disadvantages between different markets.

Let us understand the advantages of filling out the quarterly report form on time and declaring results for a publicly listed company.

• It reduces information asymmetry.
• It boosts investor confidence and hence helps in bringing additional investments to the business.
• It helps prepare the trailing twelve months, which is determined by employing two comparable quarterly statements and one recent annual financial statement.
• It reduces any scope of window dressing in the financials, which is hard for annual reports. Window dressing is making year-end financial statements attractive so that they could attract new investors to the business.
• Since window dressing and information asymmetry are reduced, this results in the display of transparent financial statements.

Despite the advantages mentioned above, quarterly report dates can be a hassle or hurdle for both companies and shareholders. Let us understand the disadvantages of the report through the discussion below.

• Any activity mentioned in the quarterly reports but absent in the annual reports can impact the business's growth prospects.
• Since these statements are not audited, they may not be easily understood by the layman.
• It isn't easy to prepare these reports that are in line with the company's performance objectives consistently.
• These reports are generally not standardized as compared with the annual reports.

Despite the fact that both these reports declare the performance, challenges, and executive summaries of the company, there are differences fundamentally with regard to an annual report and filling out a quarterly report form. Let us understand the differences through the comparison below.

1. The annual reports are reports that the business has to release to its shareholders annually.
2. The quarterly reports are released quarterly.
3. The annual reports would consist of auditor opinion, management discussion analysis, and the financial statements for the current financial year.
4. The quarterly reports may be composed of the only year's financial statements and quarter financials, generally unaudited. They do not have any auditor opinion or management discussion analysis.
5. The annual reports are normally filed as 10K in the SEC, whereas quarterly reports are available as 10Q.
6. The deadline to file annual reports is within 60 days, whereas, for interim financials, the deadline is slated as 45 days for submission.

This article has been a guide to what is a Quarterly Report. Here we explain its requirements, format, examples, advantages, and disadvantages in detail. You may learn more about financing from the following articles –

• Interim Reporting Example
• Adverse Opinion Example
• Earnings Season
• Red Herring Prospectus