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Q: Why is it favorable to select a fiscal year that ends when the operating cycle is at its lowest point?
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What type of business is most likely to select a fiscal year that corresponds to its natural business year instead of the calendar year?

Seasonal businesses that have distinct peak seasons and low seasons are more likely to select a fiscal year that corresponds to their natural business year instead of the calendar year. This allows them to better align their financial reporting with their operating cycles and accurately assess their performance within their busiest times. Examples of such businesses could be tourism, agriculture, or retail industries.


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Why might a department store select a fiscal year ending January 31 rather than Fiscal year ending December 31?

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