Standalone vs Consolidated Financial Statements: Difference and Comparison

Organizations and companies run for a long period and have a huge infrastructure. It is not easy to keep information about their performance and actions.

So, the financial statement is there to handle these tasks and provide adequate information. Standalone and consolidated are two financial statements used to extract and analyze such information.

Key Takeaways

  1. Standalone financial statements represent the financial performance of a single company.
  2. Consolidated financial statements combine the financials of a parent company and its subsidiaries.
  3. Consolidated statements comprehensively view a corporate group’s overall financial health.

Standalone vs Consolidated Financial Statements

The financial statements of a single firm are referred to as standalone financial statements. Consolidated financial statements are the combined financial statements of a parent company and its subsidiaries.

Standalone vs Consolidated Financial Statements

The concept of a standalone financial statement represents the performance and position related to the financial state of a particular company as a sole entity.

In standalone statements, its subsidiaries’ performance and financial state are not included. A company is a large group that includes multiple people and provides many services.

The concept of a consolidated financial statement represents the same parameters: financial performance and the position of a company in its respective field, but it includes all the subsidiaries.

Since subsidiaries are also a major part of a company, their performance affects the company on a big scale. So, it is suggested to include subsidiaries as well.

Comparison Table

Parameters Of ComparisonStandaloneConsolidated Financial Statements
MeaningThe standalone statement is a balance sheet that describes the financial performance and position of a company. The consolidated statement is a balance sheet that describes the financial performance of a company and subsidiaries companies.
StructureA standalone financial statement consists of the profit, loss, investments, sales, performance, financial state of a particular company.A consolidated statement consists of the profit, loss, investments, sales, financial state of a company including its subsidiaries.
UsageA standalone statement is used in the representation of the sole entity that relates to the parent company only. A consolidated statement is used in the representation of the entire entity that relates to a company and its subsidiaries.
AdvantageThe standalone financial statement is very beneficial to get knowledge about the true entity of a company. A consolidated statement is useful to represent data in one sheet and it facilitates the concept of decision making.
DisadvantageWith standalone statements, the real nature or performance of subsidiary companies of the parent company can not be known. The disadvantage of a consolidated statement is that it can sugarcoat the performance of the parent company.

What is Standalone?

The specific data related to a particular company accumulates over time and is represented by standalone financial statements.

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This data can be about anything, such as profit or loss made by the company, expense or budget of the company, trends or workflow of the company, investment, sales, etc.

The structure of data is very complex, but it should be analyzed from time to time to make necessary improvements.

An example of a movie distribution company can be taken to understand the entire scenario.

A company ‘x’ generates its revenue by selling or distributing short movies made by other studios and companies and doesn’t have other departments of the business. That’s how it creates multiple subsidiaries.

In this case, a standalone financial statement would only collect and analyze the data or information related to the company ‘x’. It has nothing to do with the financial performance of the subsidiaries of ‘x’.

Although, the performance and position of subsidiaries make an apparent impact on the company ‘x’.

Hence, a standalone financial statement avoids every achievement or failure of subsidiaries but focuses on the sole entity of a particular company.

Standalone statements are very beneficial for describing the exact state or liabilities of the company.

What is Consolidated Financial Statement?

In consolidated financial statements, the all-over performance of a particular company, including its subsidiaries, is elaborated.

Unlike standalone statements, consolidated financial statements focus on each and every change in the performance of the company. The format of consolidated financial statements is very vivid and analytical.

To understand it better, a similar example of the company ‘x’. The company ‘x’ is a movie distribution company and has many subsidiaries.

So, when the consolidated financial statement is prepared, it would consist of performance, financial state, loss, profit, and revenue generated by the company ‘x’ itself and all its subsidiaries.

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The consolidated statement represents the complete financial state of the subsidiaries of the company.

All the meticulous profits or significant losses made by subsidiaries would appear on the consolidated financial statements. Consolidated statements are prepared by the parent company that includes all the records of subsidiary companies.

In other words, consolidated financial statements are used to portray the financial performance of a company and its subsidiaries.

The company’s management department is liable for preparing consolidated statement balance sheets. Consolidated statements are useful for analyzing the entire data in one glance and can be used to attract potential investors.

By preparing consolidated statements, there is no need to make a balance sheet for each subsidiary company.

Main Differences Between Standalone and Consolidated Financial Statements

  1. The standalone statements can avoid the achievement of subsidiaries, while consolidated statements include the achievement of both parent companies and subsidiaries.
  2. A stand-alone financial statement is a balance sheet for a single company, while consolidated financial statements are a balance sheet for both subsidiaries and parent companies.
  3. A stand-alone financial statement can be used to represent potential investors by the parent company, while consolidated statements are prepared for the parent company.
  4. The standalone financial statement elaborates on the original financial state of the company, while a consolidated statement can cover the lacking areas of the parent company.
  5. The standalone financial statement provides data based on specific terms, while consolidated financial statements combine the entire data making it hard to analyze.
References
  1. https://www.bankalfalah.com/wp-content/themes/alfalah-theme/pdf/consolidated-financials-31-12-2016.pdf

Last Updated : 13 July, 2023

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6 thoughts on “Standalone vs Consolidated Financial Statements: Difference and Comparison”

  1. The concept of standalone and consolidated financial statements was already familiar to me, but this post provides an excellent breakdown of the advantages and disadvantages of each. Nicely done.

    Reply
  2. I respectfully disagree with the post. I think that as a potential investor, I would be more interested in the consolidated financial statements because they provide a holistic view of the company and its subsidiaries.

    Reply
  3. I personally think that standalone statements are much better. It’s true that they lack the achievements of subsidiaries, but they provide a clearer and more accurate value of the company’s performance.

    Reply
  4. The difference between standalone and consolidated financial statements is clear and well explained in the article. I’d just like to point out that the structure and usage advantages of each type of financial statement were also very useful and easy to understand.

    Reply
  5. This is a very informative article that provides a comprehensive overview of financial statements. The comparison table really helps in understanding the differences between standalone and consolidated financial statements. It’s well-written and easy to grasp. Great job!

    Reply
  6. The article did a good job of providing a clear explanation of standalone versus consolidated financial statements. I think the author made a compelling case for the importance of using consolidated statements for a more complete view of a company’s performance.

    Reply

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