Definition
Consolidated financial statements are financial reports that show the combined financial position of a parent company and its subsidiaries as a single entity. It gives a complete picture of the overall business.
Example
In case a company owns two smaller companies, it will combine all their assets, liabilities, income, and expenses into one report. This combined report is called the consolidated financial statements.
Caution
Consolidated statements may hide the individual performance of each subsidiary. Investors should also look at separate financial reports to understand the full details.