TradeAlmanac
Sign in

Equity method

How a stake the group influences but does not control is reported: not that company's revenue, but the group's share of its profit, as a single line.

How to read the number

Explains how a holding company can report large profit on modest revenue: the result of its associates arrives ready-made as one line.

When the metric lies

Cash from such a stake arrives only as dividends. The profit is in the accounts while the cash flow may be absent for years.

Related terms