Quarterly reports: Overview, definition and example
What are quarterly reports?
Quarterly reports are periodic financial and operational updates that businesses, particularly publicly traded companies, provide to stakeholders every three months. These reports typically include information such as revenue, expenses, profits, cash flow, and updates on key business activities. In some jurisdictions, quarterly reports are legally required to ensure transparency and compliance with financial regulations.
For public companies, quarterly reports are filed with regulatory authorities like the U.S. Securities and Exchange Commission (SEC) using forms such as the 10-Q. Private companies or partnerships may also produce quarterly reports for investors, lenders, or other stakeholders.
Why are quarterly reports important?
Quarterly reports are important because they provide stakeholders with regular updates on a company’s financial health and operational performance. For investors, lenders, and analysts, these reports serve as a basis for evaluating a company’s progress, identifying trends, and making informed decisions about investment or lending.
For companies, preparing quarterly reports ensures accountability and transparency while fostering trust with stakeholders. Additionally, these reports help organizations monitor their own financial performance, compare results to goals, and identify areas for improvement.
Understanding quarterly reports through an example
Imagine a publicly traded retail company prepares a quarterly report for the second quarter of the year. The report includes key financial metrics, such as revenue growth, operating expenses, and net profit, as well as updates on new store openings and customer trends. This report is filed with the SEC and shared with shareholders to provide insights into the company’s performance and strategy.
In another example, a private real estate investment firm prepares quarterly reports for its investors. These reports summarize rental income, property values, and expenses for the firm’s portfolio, along with commentary on market conditions. Investors use this information to assess the firm’s performance and future potential.
An example of a quarterly reports clause
Here’s how a quarterly reports clause might appear in an agreement:
“The Company agrees to prepare and deliver quarterly reports to all stakeholders within [insert time period] after the end of each fiscal quarter. Each report shall include financial statements, a summary of operational activities, and any material developments affecting the Company. The reports shall be made available electronically or in physical form as agreed upon by the Parties.”
Conclusion
Quarterly reports are a critical tool for maintaining transparency, fostering trust, and ensuring accountability in both public and private organizations. By providing regular updates on financial and operational performance, quarterly reports enable stakeholders to make informed decisions and support the company’s long-term success. Including a clear quarterly reports provision in agreements ensures all parties are aligned on reporting obligations and expectations.
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.