Balance Sheet Consolidation
Financial Modeling Essentials
Three-Statement Model
Income statement, balance sheet, cash flow — linked.
Forecasting Drivers
Revenue: price × quantity. Costs: % of revenue or per-unit.
Sensitivity Analysis
Data tables for what-if on key inputs.
Returns Analysis
IRR, NPV, payback — investment decision metrics.
Noble Desktop's Financial Analyst Training Program covers financial modeling, valuation, accounting, and Excel for finance.
Learn about the process of balance sheet consolidation, where a parent company integrates and combines its financial statements into standard-form income, balance sheet, and cash flow statements.
Balance Sheet Consolidation
In finance terms, consolidation refers to the incorporation of the financial statements of all subsidiaries into the financial statements of the parent company.
Consolidation of financial statements requires the parent company to integrate and combine all its financials to create a standard-form income statement, balance sheet, and cash flow statement, as part of a set of consolidated financial statements.
In this video we will talk about the Balance Sheet Consolidation.
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To create a consolidated BS we would take the BS values of the investor and investee and add them together. And then apply transaction effects.
We will take a look at the Example of BS Consolidation in Excel in the following video.
1Full Video Transcript
2Understanding Balance Sheet Consolidation
In finance terms, consolidation refers to the incorporation of the financial statements of all subsidiaries into the financial statements of the parent company. Consolidation of financial statements requires the parent company to integrate and combine all its financials to create a standard form income statement, balance sheet, and cash flow statement as part of a set of consolidated financial statements. In this video, we will talk about balance sheet consolidation.
To create a consolidated balance sheet, we would take the balance sheet values of the investor and the investee and add them together, and then apply transaction effects. Transaction effects in this case scenario would be: the shareholders of the investee have been bought out, so we need to zero out the investee's shareholders' equity on consolidation. Secondly, the transaction must be financed, so we need to summarize in the sources and uses of funds table. Last but not least, we need to calculate the premium paid above book amount and allocate component parts: step-ups, step-downs, and goodwill.