One holding, several answers
In a fictional model the factory sells goods to the trading company for 120, and the trader resells all goods to an external customer for 170. Adding both entities’ revenue gives 290, but the group’s external sale is 170; 120 is an internal transfer.
If factory cost is 80 and there are no other costs, factory profit is 40, trader profit is 50 and total is 90. That equals external revenue 170 less external cost 80. The simplification does not cover all consolidation procedures, tax or unrealised profit in inventory.
If inventory remains inside the group, profit in stock raises further questions. Intercompany loans create reciprocal claims and liabilities. Equal total profit does not prove that simple addition is correct; read consolidation notes and applicable rules.
What to check before comparing periods
List included entities and perimeter changes. Acquiring a subsidiary can increase sales without improving the old business; selling one can reduce assets without worsening remaining operations. Separate group composition from like-for-like performance.
Identify whether profit belongs to all group owners or parent owners. Do not put measures with different bases in one ratio. For debt, ask whether it covers the whole perimeter, includes leases and faces restrictions on cash transfers. Mark unknown restrictions rather than assuming none.
The dividend trap
If a subsidiary is already included in consolidated results, an intra-group dividend cannot automatically be added again as new external group income. The parent’s separate statements may look different. The statement label—consolidated or separate—matters more than similar-looking lines.
IAS 24 addresses related parties and transactions with them. A related entity is not automatically inside full consolidation. Relatedness, ownership and control are different words; read each relationship list separately.
What is enough for a comparison
Create a data passport: reporting entity, standard, period, currency, perimeter, share of result and comparative figures. Only then compare trends or build a ratio. A simplified story does not resolve IFRS 10 exceptions, joint control or participant rights. Continue with [the financial-statements roadmap](/guides/financial-statements-roadmap/) and [peer comparison](/guides/peer-comparison/).
Can money move within the group?
Suppose most cash sits at a subsidiary while near-term debt is at the parent. Consolidated cash shows a perimeter resource, but a particular payment requires a transfer path. Dividends, loans and other transfers have different conditions; common ownership does not make cash fully interchangeable.
Separate statements do not replace the consolidated view of economic risk. A parent that looks low-risk but guarantees other entities may require more than its ordinary balance-sheet lines. Establish obligations and links from disclosures, not the group name.
Use two diagrams: legal payers and consolidated operations. The first shows who performs a contract; the second shows what group forms present. A mismatch is not necessarily a contradiction; it identifies the level of analysis.