Individual Financial Statement: Fill & Download for Free

Standalone financial statements show the financial position of the company alone (and no other legal entity). Consolidated financial statements show the financial position of the company itself along with it’s subsidiary companies, associate companies and joint ventures.Therefore, when you look at the consolidated financial statements, you are looking at the financial position of a group of companies - taken together. In this context, there are some questions that we should go through, to be able to understand the concept of consolidated financial statements.#1] What are subsidiaries, associates and joint ventures?A subsidiary is a company that you control - normally by owning more than 50% of the shares or by controlling the board of directors.An associate is a company on which you exercise significant influence - this would mean less than control but still enough influence to control their decisions; a thumb rule of minimum 20% holding is considered for this (less than 50%, of course).A joint venture is not entirely controlled by you, but you jointly control the assets, operations or the resources of the venture.When an entity prepares a consolidated financial statements, it includes not only the financial information of the company itself, but also of the above types of companies that are included in the financial statements.#2] When does a company have to prepare consolidated financial statements?In India (since that’s the region the question is about), preparation of Consolidated Financial Statements is mandatory for listed companies or public companies that have a subsidiary, associate or a joint venture. Obviously, if you have no such company, then consolidated statements are meaningless.However, the company is not mandated to release all the financial information every quarter. In order to understand which information is mandatory and which is optional, you can check out this detailed list of SEBI guidelines.In the question description you mention that Reliance does not provide this data quarterly. That’s not true. If you see the quarterly financial results of Reliance Industries Limited, you will find both consolidated as well as standalone results over there. Like I said, it is mandatory for listed companies.When a company prepares consolidated financial statements, they have to follow the relevant accounting standards.#3] How are consolidated financial statements prepared?The basic idea is that financial information shown in the consolidated statements should include information about the subsidiaries, associates and JVs also. But each of these are treated differently. Here’s how:Subsidiaries - all the assets, liabilities, incomes and expenditures of the subsidiaries are completely added to the assets, liabilities etc of the holding company. So, even if you own 75% of the shares, your balance sheet will reflect 100% of the assets of your subsidiary. The balancing figure (25% that you don’t own) will be subtracted from equity, as “minority interest”).Joint ventures - all the assets, liabilities, incomes and expenditures are proportionately added to the assets, liabilities of the holding company. For example, if you own 51% of the joint venture, then the assets will be added only to the extent of 51% of the JV.Associates - usually, associates are consolidated using the equity method, which means that the individual assets, liabilities etc. of the associate will not be added to the consolidated financial statements, but the “value” of the investment in that associates will be revised to include the proportionate value of the associate that you own.Really, this is too technical. I cannot simplify this further if you don’t know the basics of accounting. But remember that the method of consolidation is different for these three, and there are laid out standards for the same.#4] Is this data important for the investors?Yes, it is.Investors have invested their money in the associate, subsidiary or the JV. Hence, they need to know whether it makes sense to continue that investment or not. As such, a company is therefore required to disclose to their shareholders the financial results that we get from these investments.Presenting it separately would not add much value. Preparing consolidated financial statements helps to reflect the true value of those investments and the correct impact they have on the financial statements of the company. So, obviously it is a very helpful information for the investors. Which is why it is mandatory for public listed companies in India to release consolidated financial statements.

If you want to be an accountant/CPA, then I would advise an accounting degree (like the other answers here). Otherwise it is not necessary.Accounting is important, but I cannot tell you how many times I have heard a successful investor claim "I'm not an accountant" to explain why they were glossing over some detail. To be clear, these individuals do have an understanding of accounting, it’s just not as thorough as what might be expected of a talented CPA.What's most important is understanding what creates and destroys value. The best exposure you could get would be on the job training (M&A, PE, HF, etc.) but I assume you would not be asking if you had that exposure. So start with some simple accounting texts:VocabularyAmazon.com: Accounting Made Simple: Accounting Explained in 100 Pages or Less (9780981454221): Mike Piper: BooksIn my experience, people who claim that they simply cannot understand finance don’t spend enough time on vocabulary. The math is pretty simple. It’s just explained in a different language. Learn the language and everything else will follow.Integrated Financial Statement ModelIt may seem like a stretch, but once you have a grasp of the vocabulary I would work through building an integrated financial statement model (income statement, balance sheet and cash flow statement) with a five year projection. This exercise is what caused everything to “click” for me as an analyst. I built ASimpleModel.com to share this learning experience (free video-driven instruction):Start with Introduction to Financial Statements: This video series introduces the financial statements in the context of building a financial model. In other words, it emphasizes the relationships between the financial statements. When you finish this video series, take a break, and write down in your own words how the financial statements link to each other (sidenote: this is one of my favorite interview questions for entry-level analysts).Then move on to Integrating Financial Statements: This is a critical process to understand. As you work through this exercise pay attention to cash. You want to be hyper aware of the line items that generate or consume cash (this will make more sense in the videos).As you forget words take the time to look them up. To avoid having to flip back and forth between texts, use Investopedia - Educating the world about finance every time you come across new vocabulary.ValuationThen move on to texts that explain value:The Little Book of Valuation - written by Aswath Damodaran, a legend in the world of valuation. You should also consider his blog: Musings on Markets.Valuation: Measuring and Managing the Value of Companies, 5th Edition: 9780470424650: Economics Books @ Amazon.com (this one is dense, but I used it as a reference for years - an incredible resource)Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 3rd Edition: Howard Schilit, Jeremy Perler: 9780071703079: Amazon.com: Books (focuses on how financials are manipulated and will train your eye to look for irregularities)Annual ReportsThen (to echo David Ecale) start working through 10-Ks (annual reports) and pay attention to the notes. Read the shareholder letters and think about what the CEO is attempting to communicate to individuals interested in the companies ability to create value. You will come across sections like “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” that appear dense and possibly not worth your time. Read them with Investopedia handy - it’s an education in accounting.If you want a good place to start - John Deere (link to annual report) - as practice, make sense of the following: “The one-time blacksmith shop has become a kind of bank - at least, operating income from the Deere Captive finance unite, John Deere Capital Corp., has grown to eclipse the earnings from shrinking equipment sales. Of overall operating income in the three months to Jan. 31 ag and turf sales chipped in $144 million, or 35%; financing activity, $194 million, or 48%. As recently as fiscal 2013, the respective contributions to operating income were 79% and 15%.” Grant’s Interest Rate Observer March 11, 2016Under Armour is another interesting case-study. They recently experienced strong growth in sales, but working capital outpaced this growth. Go through their 10k and examine the impact this has on cash.Finally, pick up Berkshire Hathaway Letters to Shareholders, 2012: Warren Buffett, Max Olson: 9781595910776: Amazon.com: Books - amazing amounts of insight. If you do not want to pay for the book just go to Page on berkshirehathaway.com - you can download the letters one at a time going back to 1995.More Reading…For the self-motivated an abundance of material exists. For a list of additional books - ASM Books.

Bottom-up is an investment approach that focuses on the analysis of individual stocks and de-emphasizes the significance of macroeconomic cycles and market cycles.This approach assumes that individual companies can do well even in an industry that is not performing, at least on a relative basis. In bottom-up investing, the investor focuses his attention on a specific company and its fundamentals, rather than on the industry in which that company operates or on the greater economy as a whole.Bottom-up investing forces investors to consider microeconomic factors first and foremost. These factors include a company's overall financial health, analysis of financial statements, the products and services offered, supply and demand, and other individual indicators of corporate performance over time. Alternatively, accounting irregularities on a particular company's financial statements may indicate problems for a firm in an otherwise blooming industry sector.