Financial statements are written reports that summarise a company’s financial condition over a certain period (quarterly, annually, or monthly).
These financial statements comprise three major elements:
Statements | Description |
Income Statement | It shows revenue, expenses, and Profit after Tax (PAT). It is also called a profit-loss statement |
Balance Sheet | Statement of the assets, liabilities, and capital of a business at a particular point in time. It shows how much money a company owes and owns at a point in time. |
Cash Flow Statement | Cash flow statement outlines the cash inflows and outflows of a company, which includes cash received from its ongoing operations and external investment sources, as well as cash payments made to finance business activities and investments. |
These financials are filed for the last fiscal year, most of the time at the end of a company’s tax year, although a few companies prepare it quarterly or even on a monthly basis.
Fiscal year is dependent on the geography of the company.
Example :
In case of India, the fiscal year starts on 1st April and ends on 31st March
In case of Germany, UK etc., the fiscal year is flexible and can be chosen by the company
Financials are of 2 types:
Type of Entity | Description |
Standalone | Represents the financial statement of a single entity |
Consolidated | Represents the financial statement of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent company and its subsidiaries are presented as those of a single entity |
Financials are prepared for the legal entity associated with the domain of the company
Example :
Ola has 12 Legal Entities. Out of which ANI Technologies is the parent company and the remaining 11 are subsidiaries. In this case, we will prepare both Standalone & Consolidated Financials - ANI Technologies Financials