Consolidate

What is to 'Consolidate'

To consolidate is the action of combining of assets, liabilities and other financial items of two or more entities into one. In the context of financial accounting, the term consolidate often refers to the consolidation of financial statements, where all subsidiaries report under the umbrella of a parent company. These statements are called consolidated financial statements. Consolidation also refers to the merger and acquisition of smaller companies into larger companies. A consolidation, however, differs from a merger in that the consolidated companies could also result in a new entity, whereas in a merger one company absorbs the other and remains in existence while the other is dissolved.

BREAKING DOWN 'Consolidate'

In financial accounting, consolidated financial statements provide a comprehensive view of the financial position of both the parent company and its subsidiaries, rather than one company's stand-alone position. In business, consolidation occurs when two or more businesses combine to form one new entity, with the expectation of increasing market share and profitability, and the benefit of combining talent, industry expertise or technology.

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RELATED FAQS
  1. Are domestic and foreign subsidiaries included on a company's financial statements?

    A subsidiary is a company that is controlled by another 'parent' company. The subsidiary acts and operates like its own entity ... Read Answer >>
  2. How do I identify a stock that is under consolidation?

    Discover the three major characteristics that stocks or securities exhibit when they are trading under a period of price ... Read Answer >>
  3. What does it mean if a security is under consolidation and why is it important?

    Discover some of the different meanings for "consolidation" with respect to traded securities. Learn why consolidation is ... Read Answer >>
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