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Why do we eliminate some of the cash-flows of individual companies while preparing consolidated cash-flow statement of the holding company?

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Question added by Deleted user
Date Posted: 2014/08/22
Faizan Sufi
by Faizan Sufi , Supervising Senior , Pakistan Credit Rating Agency (PACRA)

In preparing consolidated cash flow statement, the parent company must eliminate numerous transactions among the parent and its affiliates before presenting the consolidated financial statements to the public to avoid counting revenue/expense twice and giving the financial report reader the impression that the consolidated entity has more profits or owes more money than it actually does.

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