Calendarisation

Companies do not share a financial year. A peer ending in March and one ending in December report over different twelve month stretches, so their multiples measure different economic conditions even when both are correctly calculated.

Calendarisation weights each reported period by how much of it falls inside the target window. For a calendar year figure, a company with a March year end contributes one quarter of the year just ended and three quarters of the following year.

The resulting number appears nowhere in the company's accounts, which is exactly the point: it is the only figure that can sit beside a December year end peer in the same table.

The simple weighting assumes earnings accrue evenly through the year. For a business with real seasonality, a retailer earning most of its profit in the fourth quarter, weight by actual quarterly figures instead. The principle is unchanged, only the precision.