What are group financial statements?

Group financial statements are often prepared by companies that have several sub -companies under their umbrella. If the parent company owns a smaller company, a group financial statement can be used to illustrate what is happening with all companies as a total. This process is usually made a total of the number of the financial statements of each company and then by making the correct repairs. Many times the parent company will issue group financial statements and individual financial statements for each company. This is done for various reasons, such as showing the overall economic power of all companies together.

Many times a large business will establish a subsidiary for a reason other than being profitable according to their own merit. For example, a larger company could establish another company in the related area of ​​Just, so it can provide a specific product of the parent company. If this happens, a smaller company does not necessarily have to be profitable. This does not necessarily mean that a smaller companyis a failure. The parent company does not have to deal with the profitability of individual companies, as is the profitability of a group of companies they own.

Instead of publishing an individual financial statement for an unprofitable company, the parent company may decide to include it as part of the published group financial statements. In this way, it can be displayed as part of the profit group instead of an unprofitable individual society. Many times, when all financial numbers from each group in the group are added, a completely different financial image begins to appear.

The process of creating group financial statements is illuminated a bit more complicated than creating a traditional financial statement. An individual who creates this statement must have full access to financial information from all involved companies. The individual is most likely to accept individual financial statementsof each company and adds all numbers from each category in statements. At this point, the individual will make some repairs and adjustments to group financial statements to display the correct financial image. In most cases, the investor will be able to obtain most of the same information from this type of statement that he could obtain from individual statements.