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The subsidiaries can have losses or liabilities that would have a negative impact on the consolidated F/S, e.g., lower consolidated profit, or higher gearing. The latter situation is known as ‘off-balance sheet financing.” This was at the core of the Enron scandal.
You can read more about this here: https://www.investopedia.com/articles/analyst/022002.asp#axzz1Owrz2AbN
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