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Let's say there are two companies that have different reporting months for annual reports. Company "C12" report on 12 month and "C8" on 8 month.

Now consider the timeline of possible events:

  • 2000-1, economy is great, company C12 published report with large Revenue.
  • 2000-2, global economical crisis started, sales for all companies are down.
  • 2000-9, crisis continues, company C8 published report with small Revenue.
  • 2001-1, crisis continues, company C12 published report with small Revenue.

The problem:

At the time 2000-9 we have two reports: C12 2000-1 large revenue and C8 2000-9 small revenue. And we may incorrectly decide to sell C8 and buy C12 because C12 has better older report that's hasn't been affected by crisis.

How to deal with that? I'm thinking about a way to maybe using trends over say 10 companies to calculate market trend and somehow normalise C12 and C8 revenues with that trend? But how exactly to do that?

I'm only interested in Revenue - Gross Sales.

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While there remains a time discrepancy that needs to be accounted for, a lot of companies report quarterly earnings as well. The quarterly reports are generally much less verbose but still give an update of the current year to date situation.

In your example, if both firms report quarterly as well as annually, you would therefore be left to compare Q2 of "C12" and the annual report of "C8".

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  • Thanks, yes, I agree about using quarterly reports and Trailing Twelve Months. But I'm also interested in a solution to the root problem - if there are approaches to solve it directly and somehow normalise reports on different dates.
    – Alex Craft
    May 24, 2020 at 10:26

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