What is a Standalone Financial Statement?
In the world of finance, understanding a company’s performance is crucial for investors, analysts, and stakeholders. One of the tools used for this purpose is the Standalone Financial Statement.
A Standalone Financial Statement is a financial report that provides the financial details of just one specific company—typically the parent company. It does not include any data related to its subsidiaries, joint ventures, or associate companies. This means the statement shows how the core business is performing on its own, without being influenced by the financial activities of other entities within the group.
Why Are Standalone Financial Statements Important?
Standalone financial statements are used by investors and analysts to:
- Assess the core strength of the parent company.
- Understand how well the main business operates without the support or drag of its subsidiaries.
- Evaluate performance for decision-making when looking purely at the parent entity.
Limitation of Standalone Statements
While standalone reports offer valuable insight, they do not give a complete picture of a company’s overall health—especially when it has many subsidiaries. For a more comprehensive understanding, investors rely on Consolidated Financial Statements, which combine the financials of the parent company and all its related entities.
Two Types of Financial Statements:
- Standalone Financial Statements:
- Include only the financials of the parent company.
- Do not account for subsidiaries, joint ventures, or associates.
- Consolidated Financial Statements:
- Include financial data of the parent company and all linked entities.
- Provide a complete and unified view of the business group’s performance.
Understanding both types helps in making informed investment and business decisions.