It represents a financial report that presents the combined financial results of a parent company and its subsidiaries as if they were a single entity. This statement tallies the revenues, expenses, gains, and losses of all the included companies to arrive at a unified net income figure. For example, if Company A owns 80% of Company B, the statement reflects 100% of both companies’ financials, with an adjustment for the non-controlling interest representing the 20% ownership stake held by others in Company B.
The document is essential for investors, creditors, and other stakeholders seeking a holistic view of a business group’s financial performance. It provides a clearer understanding of the overall profitability and efficiency of the organization by eliminating the impact of intercompany transactions and revealing the true economic substance of the group. Historically, the need for this type of report arose as companies began expanding through acquisitions and establishing complex corporate structures.
