Question

Explain the importance of consolidation process

Answer 1

Consolidation is to be done of 2 companies. entities, enterprise to get several benefits such as Tax benefits, profit sharing, expansion, valuation of shares increase.

The Importance of Financial Consolidation-

For businesses with multiple departments or parent companies with multiple entities, there are several advantages to financial consolidation. It’s no wonder that consolidated financial reports are required by Generally Accepted Accounting Principles (GAAP). But consolidation takes time — and it can be challenging.

Here are just 3 reasons why your company benefits from financial consolidation:

1. Performance At-a-Glance

For executives, investors, analysts and owners alike, financial consolidation is the single best way to view overall performance at-a-glance. Consolidating diverse financial reports into a single financial “snapshot” gives C-Suite, finance, and stakeholders invaluable insight into the parent company’s overall health. Without consolidation, it can be extremely difficult to assess financial performance among various subsidiaries.

2. Strategy

With financial reports siloed among multiple entities, charting your company’s overall direction can feel a bit like steering a ship with more than one map. Financial consolidation gives leadership the top-level insight they need in order to budget, forecast and plan more effectively.

3. Efficiency

By combining multiple reports into a single consolidated financial statement, finance has more time for strategic planning.efficiency is measured by the comparative analysis in 1 consolidation of financials.