Last Fiscal Year (LFY)

What Is a Last Fiscal Year (LFY)?

The term last fiscal year (LFY) refers to the most recent 12-month accounting period that a business uses to determine its annual financial performance. The Securities and Exchange Commission (SEC) requires businesses to list their last fiscal year's revenue, in addition to other financial figures measured on a fiscal year basis. Analysts, investors, and corporate management often use figures and metrics from a company's last fiscal year to make forecasts about its financial performance.

Understanding Last Fiscal Years (LFYs)

A fiscal year is an annual period generally used by companies to report their financial statements for accounting purposes. The term fiscal year is also referred to as a budget year. Governments also use operate through fiscal years and report financial data once that period is up. Fiscal years run for 12 full months and are characterized by the year-end.

A company's fiscal year may not be the same as a calendar year. This means they don't necessarily run from January to December. Some fiscal years run for the 12-month period between July 1 and June 30. Others may have their fiscal year between Oct. 1 and Sept. 30 of each year. Corporations choose the 12-month period for which they report their financial statements based on the type of company and the seasonality of the business.

The most current 12-month period reported by a company is called its last fiscal year. Financial information is submitted on a timely basis and at the fiscal year-end. The LFY is used as a way to determine a company's financial performance. As mentioned above, the SEC requires companies to include information from their last fiscal year on a number of their financial statements and reports, including their 10-K and 10-Q filings.

Information reported by companies in their last fiscal years provides a lot of valuable information for investors and financial professionals. For instance, an analyst can use information from the last fiscal period to make forecasts about the future of different companies. They can try to predict whether or not a business's current performance will outdo that of the previous fiscal year.

A fiscal year-end normally occurs at the end of a quarter.

Special Considerations

While there is a chance that the last fiscal year may help predict future performance, there are exceptions to this rule. For instance, the inclusion of one-time financial anomalies in the last fiscal year's results may cause an ineffective comparison. That's because one-time non-operating events could skew a company's metrics.

Let's say ABC Corporation sold a factory for $1 million and reported the cash as revenue in the last fiscal year's financial statements. Conducting normal analysis and including this information from the LFY will provide inaccurate results. Unless it is specified that this extra sum of money didn't originate from its regular day-to-day operations, individuals may mistakenly believe that the company's operations generated an extra million dollars and may continue the trend going forward.

Example of a Last Fiscal Year

Let's use the hypothetical example of ABC Corporation from the section above to show how LFYs work. Suppose the company's fiscal year starts on April 1 every year and ends on March 31, and it is currently July. If it were to list its revenue from the last fiscal year, it would show the results that took place from April 1 of the previous year to March 31 of the current year.