What information does a consolidated financial statement provide?

Consolidated financial statements are designed to present the financial position, results of operations, and cash flows of a parent company and its subsidiaries as if they were a single economic entity. This format is essential for providing a clear picture of the overall financial health and performance of the corporate group.

The key aspect of consolidated financial statements is that they eliminate intercompany transactions which could distort the financial results if each subsidiary were reported separately. This combined approach allows stakeholders, such as investors, analysts, and creditors, to understand the total resources and obligations of the entire corporate structure, rather than just viewing individual subsidiaries in isolation.

The other choices reflect different types of information that do not align with the purpose of consolidated financial statements. Tax obligations and detailed financial positions of each subsidiary would typically be found in separate financial statements, and market trends for affiliated companies are more relevant for market analysis rather than consolidated reporting. Therefore, the focus of consolidated financial statements is on the collective results and financial status of the parent and subsidiaries combined.