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Group accounting

Published on March 29, 2017   8 min
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Hi, and welcome to part eight: Group Accounting in this HSTalks lecture series on Analyzing Financial Statements. My name is David Bond.
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If you've been following this series, you may have noticed as we look at Qantas's financial statements, they refer to the income statement, balance sheet, and cash flow statement not just as the income statement, balance sheet, and cash flow statement, but it's the consolidated income statement, consolidated balance sheet, and consolidated cash flow statement. The reason for this is that the information contained in the annual report is not just about one entity but rather about an entire group. According to Qantas's 2016 annual report, there are six operating segments, Qantas Domestic, Qantas International, Jetstar Group, Qantas Freight, Qantas Loyalty, and Corporate in the Qantas group. And there may well be more than one legal entity residing in each of those segments and potentially some which cut across them. If somebody is interested in investing in Qantas, they are just interested in investing in, say, Qantas Loyalty, they're interested in how the entire Qantas group as a whole is performing because it's ultimately the group performance which is reflected in the income statement and Qantas's share price. The consolidated financial statements are simply an aggregate of all the entities which make up the Qantas group.