Liquidity and solvency are two important factors to be known before making any investment. When my investments maintain liquidity or make my investment in the solvency of the company intact.LiquidityIt is the ability of a company or firm to meet current liabilities with current assets it has. Liquidity is the short term concept and helps in paying off companies immediate liabilities.It also measures a company's extent to meet their financial obligations, if they fall due to payment with the help of stocks, cash, securities, certificate of deposit etc. cash is a very important liquid asset and it easily turned into ... Read More

In a differential pricing method, the price of the same product is set differently based on customers, location, product form etc. The main objective of this method is profit maximization. This pricing is also called as discriminatory or multiple pricing.Price is set based on the following factors −Customer segment pricing − Different people will pay different prices for the same product based on the segment they live in. For example, examination fees.Image pricing − Based on the image of the product in the market, companies will charge differently in the market for the same product. For example, clothes.Product form pricing ... Read More

In simple words, merger and acquisition is nothing but combining two or more companies to form a single company. Merger and acquisitions help in achieving strategic goals, alternative to organic growth. In sellers prospective Merger and acquisitions gives cash out or to get more risk and reward in newly formed companies.Mergers and acquisitions enhance values for both buyer and user. For buyer merger and acquisitions accelerate with new channels and products, decrease or reduction in competition, effective supply chain management.Unsuccessful mergers and acquisitions hurt both buyer and seller. Some of the reasonsfor unsuccessfulness are integration mismanagement, poor due diligence, over ... Read More

When general management principles are applied to enterprise financial resources then it is called financial management. That means it involves planning, directing, controlling and organizing financial activities.Elements of financial management are investment decisions, financial decisions and dividend decisions.ObjectivesThe objectives of financial management are as follows −Ensures adequate and regular supply of funds.Ensures adequate returns to their shareholders.Optimum utilization of funds.Ensures investment safety.Strong capital structure is planned.FunctionsThe functions of financial management are as follows −Finance manager is responsible for estimation of companies capital requirements.Capital structure has to be decided. This may involve short term, long term or combination of both equity ... Read More

In perceived value pricing method, price is set based on the customer willingness to pay and what he thinks about the product. The value is decided on factors like product experience, support to service, warranty, reputation, trustworthiness etc.Company explains its customers about their offerings, product aspects, services and asks them to evaluate the price. This method measures accurate market perception.FormulaThe formula for perceived value pricing method is as follows −PP = PV * KHere PP = Product value, PV = Product Perceived value, K = Adjustment factorCase − 1 − If product value is very low to customer expectations, customers ... Read More

Quotation is the fixed price offered to customers in response to render notice. It has legal binding and when a customer accepts, it can’t be changed. Whereas, tender is the response to an invitation of tender which is submitted by a prospective supplier.Invitation of tender is the open request form which is published in printed media (local news newspaper). It can be issued for construction contractor, machinery supplier, information technology, etc. the whole process starting from inviting tender, submitting tender and filling quotation is part of tendering processQuotationQuotation is the formal document or document of promise given by supplier to ... Read More

Request proposal method is a document, which explains the project, asks for bids from contractors. In this, both technical and financial proposals are submitted in separate envelopes.Technical proposal is evaluated first and points are awarded according to the pre evaluation criteria. After attaining minimum or qualification marks, only technical proposals are evaluated. Averages of two proposals are calculated and a contract will be awarded to the bidder who gets the highest points.Company will collect information about suppliers. Sometimes, companies will send requests for proposal documents to selected suppliers. Suppliers will send their pricing, capabilities and their uniqueness among competitors.After reviewing ... Read More

It is a competitive pricing method, in which prices are decided based on quotation/estimated price or in sealed bids. This method is generally used in construction/contract business.In this, a tender notice is printed in the newspaper. Work proposals, type of job, quality, duration of project etc. are printed in the newspaper. In reply to the notice, interested parties send their sealed bid stating their price, particulars before deadline.On the due date, submitted sealed bids are opened and allocated to bid at a lower price with satisfaction conditions. Company sets the price based on how competitors' costs the product.AdvantagesThe advantages of ... Read More

In transfer pricing, the capital of one enterprise is used in another enterprise. That means management of one company can control another company. The main objectives are separate profits and performance is evaluated separately.Secondly, it affects allocations of company resources. In this method cost incurred in one enterprise can be utilized in another enterprise.The main purposes for transfer pricing are as follows −Direction of cash flows.Shifting profits.Minimize tax burden.Methods of transfer pricing are as follows −Comparable uncontrolled price method.Resale price method or resale minus method.Cost plus method.Arm's length principleEvery country has its own taxation rules. It states that the terms ... Read More

In the going rate-pricing method, price is determined on the basis of present rates prevailing in the market. Companies may set prices high or low depending on product/services to their competitor's prices.This method of pricing is useful for products/services which show fewer variations between producers. It is also called a competitive parity method. In this method, competitor's price is taken as base and price is set according to objectives, services offered and product quality.AdvantagesThe advantages of the going rate-pricing method are as follows −Competitor's price is taken as base.Uniform price in market.Misguiding customers is protected.DisadvantagesThe disadvantages of the going rate-pricing ... Read More