Financial statement

From MarketsWiki
Jump to: navigation, search

A financial statement is a single document produced quarterly or annually that details the general financial situation of a corporation at a given time, while a consolidated financial statement does the same for a parent company with several subsidaries. Investors use them to gauge the relative financial health of a company, since they offer readers snapshots of a business from different angles like cash flow and assets vs. liabilities.

Probably the most commonly-viewed financial statement is the balance sheet, which documents a corporation's assets and liabilities in two separate colums, left and right. The corporation's balance sheet is summarized by either a positive or negative figure along the statement's 'bottom line'. The two other common financial statements are the income statement, which reports business operating sales vs. expenses, and a cash flow statement, which document the cash movement in and out of the business.[1]

Big picture

More controversial is the consolidated financial statement,[2] which attempts to summarize into a single document the financial statements of all a parent corporation's subsidiaries under rules of the Generally Accepted Accounting Principles (GAAP). This is more difficult than just adding all the numbers together because subsidiaries often do business with the parent company, are subject to different fiscal year-ends and have different minority-ownership structures.

References

  1. Financial Statement. About.com.
  2. Consolidated Financial Statement. InvestorGlossary.com.