When it comes to financial accounting, the main objective is to generate financial reports that summarize the financial status of a company or individual. Financial statements include statement of cash flow, income statement and balance sheet. For you as an individual, it includes your income statement and expense statement. Most of the time, you do not only have one statement and therefore have to deal with several ones at a time. This is difficult and that is why you need to know what consolidated financial statements are.
These statements contain a combination of all other financial statements. A consolidated financial statement will show all the information about you or a company. For a company, it is a combined statement of all its subsidiaries.
Reasons for Consolidating Financial Statements
- The key benefit of a consolidated financial statement is that it provides an effective way to examine and understand your current financial status. However, when working with these statements, it is essential to ensure that all your individual statements have provided accurate information. Without accurate information, it will be difficult to deal with any emergency that may arise.
- When you consolidate your statements, you will understand the basic principles of accounting. In our extensive list of experts, you will be able to find a business partner and adviser who will ensure you are on track. The experts work with advanced software and keep all your records updated. They will also advise you on the best ways to deal with any challenge in the consolidated financial statements. Experts we link you to are skilled enough to create different avenues for you who will make it easier and more convenient when you want to consolidate your statements. Regardless of the number of statements you have, you will be able to get on track and have better control over your accounting activities.
- For you to improve your financial position, you can introduce new products to the market or approach the market with a new promotion strategy. Your main aim is to win over your competitors’ clients. You can do this by improving the current products or introducing a new marketing strategy. The new business establishments will have independent operations but under the control of the mother company. Financial experts recommend that you have individual financial statements of the subsidiary companies. With the financial statements at hand, you can evaluate the financial position of the company.
- It is difficult to analyze the accounting records of individual statements and come up with a summary of the exact financial activities that directly affect an entire company. This is why many professionals like those working with us recommend the creation of consolidated financial statements. With a consolidated statement, you are assured of a dependable report that you can present to potential lenders or financing institutions in case you need funding.
Important Points to Note
- You will be creating financial statements for both personal and second party use only. It mainly depends on your intended purpose. You will have to stick to certain rules in order to have an informative and valid consolidated financial statement. The rules are commonly termed as GAAP (Generally Accepted Accounting Principles). GAAP is made up of several components and experts in our network will find what suits your case. One of the major components is the basic accounting principles and concepts, which include reliability, consistency, cost, materiality and economic entity, among others. Your expert of choice will be able to explain to you what all these mean one by one. Another major component is the detailed rules created by the FASB (Financial Accounting Standards Board).
- When consolidating, you should ensure that you do not omit anything. You can do this by ensuring that you provide all the separate statements that have different information. It is important to note that individual reports contain the exact numbers required. Consolidation will only mean that you are using the expertise of professionals to combine your statements for a proper understanding of your general company or individual financial performance.
- In the current financial system, you have to be diverse in your business to increase revenue generated. With multiple ventures you can track performance of each business by introducing the use of financial statements. You have to produce financial reports and it is important to consolidate them. Your main venture can have a single report but for a total view, you will need subsidiary reports. When you consolidate all the financial statements, you will have a concrete report that shows all income, expenses, debts, assets and liabilities.
- The process of consolidating financial statements on your own can be very difficult. This is because it is time-consuming and it requires some skills to be efficient. You need to find experts who will help you understand the basic financial principles and improve business efficiency. We will connect you to reputable finance experts who are ready to offer you their experienced and solution-oriented consolidation services. Actually, you will find it easy to determine the financial status of your company or personal finance by analyzing just one single statement.
- Dealing with numbers requires efficient software that ensures accurate tabulation of results. Your financial statement gives you an insight of what to expect in the near future and therefore help you see how to meet any incoming challenges. You will be having only one detailed statement to present to a prospective lender. Many accounting professionals have also examined and conducted research on consolidation. They have found out that it is a useful accounting practice that keeps financial management at its best.
- These statements are important for you on a personal level. Due to the ever-changing financial times, you will realize that business expenses continue to increase and you should find ways to deal with increased spending. Therefore, you may need financing at some point. You can use consolidated financial statements to secure funds from lenders. When you present a single statement, it would be easier for your lender to analyze your profile, hence speeding up the process.
Why You Need Consolidated Statements
Practically, it is a challenge for people to evaluate performance of a business without looking at its financial report. It will be difficult to identify a common problem that affects financial performance just at a glance. You will have to spend a lot of time and you do not have the luxury of time. The professionals we link you to will show you how to spend less time. Your financial expert will help you understand the performance of your business at the end of every year when you need to be accountable for your income and spending. If you are involved in several financial activities, then consolidation can be the most effective method you can use.