Skip to content
GetProfitable
Search
Dictionary

Non-controlling interest

The share of a consolidated subsidiary that the parent does not own, carved out of both profit and equity so the parent's numbers are not overstated.

When a parent controls a subsidiary it consolidates 100% of that subsidiary's revenue and costs, even if it owns only 70%. The slice belonging to outside holders is then deducted to get net income attributable to the parent.

Missing this inflates every per-share calculation. Always use net income attributable to the parent in eps and remember that the outside stake is also part of the capital structure for market-cap-versus-enterprise-value.

Example: Northwind owns 70% of a Mexican plant that earns $30M. All $30M is consolidated, then $9M is stripped out as non-controlling interest, leaving $21M attributable to Northwind shareholders.

Related: equity-method-investment, net-income

Educational only, not advice. Spotted an error? Post in Site Feedback.