#CorporationRevenue #Q4VsQ3 #BusinessTrends
When it comes to the financial performance of corporations, the shift from Q3 to Q4 can be a bit puzzling 🤔. Many people wonder why Q4 revenue is often lower or less impressive than Q3 revenue. Let’s delve into the reasons behind this phenomenon and try to make sense of it all.
##Seasonality and Consumer Behavior
One of the key factors contributing to the lower Q4 revenue for corporations is seasonality. 🍂 During Q3, companies may experience a boost in sales due to back-to-school shopping, end-of-summer clearance events, and other seasonal factors. However, in Q4, consumer behavior shifts as the holiday season approaches.
1. **Holiday Spending Patterns:** While the holidays are a time of increased consumer spending, the focus tends to be on gifts, travel, and other non-essential purchases. This shift can affect the revenue generation for companies that do not heavily rely on holiday sales.
2. **Employee Time Off:** The holiday season also sees an increase in employee vacation time, which can impact production and service levels. This decrease in efficiency can lead to slower operations and, consequently, lower revenue for the quarter.
##Planning and Forecasting
Another reason for the disparity in Q4 revenue compared to Q3 revenue is strategic planning and forecasting. 📊 Companies may allocate more resources and marketing budget to Q3 to capitalize on back-to-school or end-of-summer trends, leaving fewer resources for Q4 campaigns.
1. **Budget Allocation:** With limited resources, companies may prioritize certain initiatives in Q3 over Q4. This strategic decision can result in a stronger performance in Q3 and a relative dip in revenue for Q4.
2. **Sales Targets:** Many corporations set aggressive sales targets for Q3 to finish the fiscal year on a high note. Once these targets are met, the focus may shift to other priorities, leading to a drop in revenue for Q4.
In conclusion, the rhyme or reason for the trend of corporations experiencing lower Q4 revenue than Q3 revenue can be attributed to a combination of consumer behavior, seasonality, employee time off, strategic planning, and forecasting. By understanding these factors, businesses can better prepare and position themselves for success in all quarters of the year. 📈
So next time you notice a corporation’s Q4 revenue dip, remember that there is more than meets the eye behind the numbers! 🧐
Most companies in the world aren’t selling holiday gifts. Pretty much every other kind of economic activity is down over the holiday season because people are taking a break.
Quarters in business don’t necessarily line up with the calendar. Businesses can chose what month is their year end.
Year end is the busiest time for corporate Accounting. The companies administration has a ton of reporting and auditing to do, and this is when companies are notorious for not wanting to spend money unnecessarily to get those few extra profit dollars on the books.
Corporations deliberately chose a year end date that is not in their busy season for that reason.
If you are a retail chain for example, you don’t want year end to be Dec 31st because Christmas is the busiest time of the year.
So making your Q4 the least profitable quarter is practical choice to make it easier for the team.
A lot of corporations also refuse to allow vacation and leave to accumulate, so managers have to force their team to take all their remaining leave at the last minute making teams less productive.
Lots of people on vacation means less people working and a lot of companies are b2b so that’s a slow down on both ends and just general lower productivity around the holidays are to blame for this. Most companies aren’t retail businesses that pick up for the holidays. The end of the calendar year is often the slowest time for companies.
Fiscal quarters don’t always align with calendar quarters (eg. Apple’s fiscal Q1 is Oct-Dec). And what companies are you looking at specifically? I guess some manufacturers and such could book their sales in calendar Q3 as they sell to retailers who intend to sell goods in calendar Q4.
Wholesalers biggest quarter is Q3, because their merchandise needs to be in retail stores before Q4.
In addition to what previously been said, there’s always a considerable amount of legal, yet strange fuckery going on in Q4 to manipulate the year end numbers for tax reasons.
A lot of times, companies push out a lot of expensive things all year to make quarterly results look better to shareholders, then finally end up paying the piper in Q4
Fiscal year ending , means in many places letting everything run on fumes . Companies know it , so they also adjust to it . It is a purely tax measure which all companies use. Stockpiles have a production cost , which is not sold , so in the fiscal year ending , they make sure they got “no” stock left.
I would add that most companies don’t do a “complete” closure of the books every month or every quarters. And, as closing Q4 is also a complete closure of the financial statement, they do special adjustments that might be in only Q4. Part of these adjustements look like expenses even if they’re not linked to an actual exchange of cash or yeah we got the service but we don’t have the bill yet. So we put that expense and a debt to tell the reader that it’s incoming, we know it and it’s linked to that period… These happen every month but not every companies try to do a clean cutoff between every months or every periods but then it’s important to do it for the yearly financial statement.
An example is the wear and the depreciation of the machines and the buildings. In best practice we would have an expense every month to account for that and all quarters would be equal. Otherwise, or if they didn’t evaluate that expense properly, they will end up with a larger expense in Q4 to catch up to that depreciation of the year.
Another example could be a full review of the inventory where you decide to throw old stuff that no longer has any value. You now need to reduce your stock in your books and you do it with an expense. The full review of the inventory and its value is generally done only to close the year so again you get a larger adjustment expense in Q4.