The term consolidate in general means to bring together or combine in a single unit. It can be applied to varied things from consolidation of materials to consolidation of institutions. In short, anything that can be combined can be consolidated.

In business, it usually refers to the act of consolidation or amalgamation, which simply refers to uniting two or more smaller companies to a bigger company. This combining of companies can happen four ways–through statutory mergers, statutory acquisitions, statutory consolidation, and amalgamations.

In finance, “consolidated financial statements” refers to the combined financial statements of a parent company and its subsidiaries. The consolidated financial statement of company gives an overall view of the financial health of the entire company, including parent company and all subsidiaries. This is important—only looking at the financial health of a subsidiary will sometimes not reflect how it will do in the future, since the parent company can always inject more funds into it or drag it down financially.

Due to the rampant debt problem these days, debt consolidation has also become a big buzzword. A lot of companies offer to consolidate debts promising less creditors, lowered overall interest rates, and a preserved credit score.