What Are Condensed Financials?
Condensed financial statements are a summary form of a company's income statement, balance sheet, and cash flow statement, usually combined into a single document. These shortened statements are created to provide a quick overview of the company's financial status with limited detail, and often for internal use only.
Items that would normally receive several line items are thus condensed into just one line, such as cost of goods sold (COGS) or retained earnings. Disclosures and footnotes that would be found in full financial statements are eliminated.
Key Takeaways
- Condensed financials are a compendium of a firm's financial statements, all found together in a single document, and with limited detail.
- This cursory view of company financials helps provide an overview of the business structure and income performance for internal use or the provide to auditors.
- Condensed financials must conform to generally accepted accounting principles and standards, and may be provided as a stop-gap until complete financial statements are made available.
Understanding Condensed Financials
Many businesses prepare condensed financials throughout the year in anticipation of their quarterly or annual reports, and are often intended for purposes of internal or external auditing, rather than for investor or analyst use.
Consolidated financial statements will present the same overall financial picture of the company as the full financial statements, but items that would normally be several line items in the full version will be condensed down to one line for brevity. For example, the condensed financial statement will only show one line for "total revenue," while the full earnings report will show revenue by operating division, products, services, interest, and any other source of revenue.
When examining a condensed set of financials, you should be extra critical when looking at each line item. The lack of detail may make the analysis simpler, but that same lack of detail can mask large fundamental problems within the firm. It may be a good idea to receive a full set of financial statements to review as well, as the full statements will contain disclosures and line items that may have been eliminated from the condensed version.
Other Considerations
The condensed financial statements must adhere to Generally Accepted Accounting Principles (GAAP) and may at times be provided to interested parties in lieu of full financial statements. The auditing team conducting an audit of the company will usually view condensed financial statements along with full financial statements for a full picture of the company's financial standing. Any important disclosures or key pieces of information that a company firm chooses to omit from their condensed financials must subsequently appear in the full versions of the balance sheet, cash flow statement, and income statement provided alongside the condensed version.
FAQs
Condensed financial statements are a summary form of a company's income statement, balance sheet, and cash flow statement, usually combined into a single document. These shortened statements are created to provide a quick overview of the company's financial status with limited detail, and often for internal use only.
What is the difference between condensed and full financial statements? ›
. 03 Condensed financial statements are presented in considerably less detail than complete financial statements that are intended to present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles.
What is the difference between condensed and consolidated financial statements? ›
However, they differ on one key point- a consolidated financial statement gives information about an organization and all of its subsidiaries in the same document. On the other hand, a condensed version sums it all up in a few lines. So, a condensed financial statement is much more succinct and to the point.
What does a condensed income statement look like? ›
In a condensed income statement, revenues may be presented as a single line item, without a detailed breakdown of various revenue sources. Cost of goods sold (COGS): This section represents the direct costs associated with producing or providing the goods or services sold by the company.
What is a special purpose condensed financial statement? ›
A special- purpose financial statement is a financial report that is intended for presentation to specific users, and it may accompany a complete set of financial statements that is intended for general use, or it may be presented separately. The audits of such statements are conducted in accordance with all the SAs.
What are condensed financials? ›
Condensed financial statements are a summary form of a company's income statement, balance sheet, and cash flow statement, usually combined into a single document. These shortened statements are created to provide a quick overview of the company's financial status with limited detail, and often for internal use only.
What are the 3 types of financial statements? ›
The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company's financial strength and provide a quick picture of a company's financial health and underlying value.
How do consolidated financials work? ›
These statements combine the financial results of multiple entities within a group into a single set of financial statements. The goal is to present a true and fair view of the group's financial position, performance, cash flows, and changes in equity.
Do you consolidate a 50% subsidiary? ›
Consolidated financial statements are used when the parent company holds a majority stake by controlling more than 50% of the subsidiary business. Parent companies that hold more than 20% qualify to use consolidated accounting. If a parent company holds less than a 20% stake, it must use equity method accounting.
What is a condensed report? ›
A condensed book, explanation, or piece of information has been made shorter, usually by including only the most important parts.
A condensed profit and loss statement presents summaries of revenue and expense categories. A single-step P&L only requires a single calculation to determine net income. A multistep P&L goes into greater detail about income and expenses than the others.
What is a condensed version of the full report? ›
Abstract
The abstract is a condensed version of the report, containing all the most pertinent information in the document. It should be short, usually no more than 200-250 words.
What is a condensed multi step income statement? ›
A condensed income statement reduces much of the normal income statement detail to just a few lines. Typically, this means that all revenue line items are aggregated into a single line item, while the cost of goods sold appears as one line item, and all operating expenses appear in another line item.
What is a condensed schedule of investments? ›
A condensed schedule of investments must detail all individual positions and investments greater than 5% of net assets and all investments in any one issuer or underlying greater than 5% of net assets. Earnings per share (“EPS”) Required for publicly traded funds.
What is unique to a consolidated income statement? ›
In essence, the consolidated income statement provides a list of all revenue generated by a business and its subsidiaries as well as all expenses incurred during a certain time period. The consolidated income statement will include items such as: All revenue generated during the designated time period.
What are the two types of financial statements for fiduciary funds? ›
34, all fiduciary funds, except agency funds, will report the same two basic financial statements. The required financial statements are: The Statement of Net Position; and, The Statement of Changes in Net Position. Agency funds will only report the statement of net position because of their purely custodial nature.
What does full financial statement mean? ›
Financial statements show how a business operates. It provides insight into how much and how a business generates revenues, what the cost of doing business is, how efficiently it manages its cash, and what its assets and liabilities are.
What is the difference between separate financial statements and consolidated financial statements? ›
Standalone financial statements provide information on the financial position of a single entity, while consolidated financial statements provide information on the financial position of the entire group of companies.
What is the meaning of consolidated financial statements? ›
Definition of Consolidated Financial Statement:
A consolidated financial statement is a combination of a financial statement of a parent company and its branches. This statement is important to review the financial situation of the group of companies owned by one business.
