Rhyme or reason for this trend?
One would think the public has more spending power or willing to spend due to the holidays (Q4).
Or due to more employees on vacation leaves etc. the rate of production slows down/not enough service staff?
In: Economics
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.
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