Minority Interest Means

We can find this term Minority Interest on a firm's balance sheet.

What does this term indicate?

Let's have a look.

Let us take two companies names A and B to understand this.

Company A is a Large Cap Company while Company B is a Small Cap Company.

The shareholding pattern of company A contains two promoters named P1 and P2.

P1 with 50% of share and P2 with 50% of the share

The shareholding pattern of company B contains two promoters named P3 and P4.

P3 with 75% of share and P4 with 25% of the share

Company A tries to acquire Company B and hence Company A buys a share of P3 say 75% and hence this company B will become subsidiaries of Company A.

Here P4 shareholder of Company B has left as such and this will be called as Minority Interest of Company A as P4 is part of Company B.

Thus the concept of Minority arises when a company has subsidiaries with 10, 20 or 30% of its shareholding been left.

If a company posts some numbers on their balance sheets in the minority Interest part then it clearly shows that it has subsidiaries.

These subsidiaries help companies to get their consolidated results where an investor focuses on.

Make use of best stock recommendations India and start trading like professionals.