In a demand based pricing method, the product price is determined by customer demand and product perceived value. In this, customer responses are considered and a suitable price is determined. Factors considered are manufacturing cost, location, market competition, quality etc.Some of the strategies are as followsPrice skimming − High price is set initially, to increase their value and then, the price is gradually decreased to increase their customer base.Price discrimination − Price is determined based on demand in market. Different markets/customers are charged differently for similar products.Value based pricing − Price determination is based on the actual value of the ... Read More

In Cost plus pricing method, a fixed percentage/profit margin is added to unit production cost which includes material cost, labour cost, overheads cost, manufacturing overheads etc. to get selling price.This type is more suitable, where there is no uniform production or each order is different.FormulaThe formula for cost plus pricing method is as follows −S.P. = PC (1+ PM)Here, S.P. = Selling price, PC = Unit production cost, PM = profit margin/fixed percentageAdvantagesThe advantages of cost plus pricing method are as follows −Simple to calculate.Increase in price can be justified.Price can be determined, if there is no market price.DisadvantagesThe disadvantages ... Read More

The term merger is nothing but combining the two or more companies to form a big unit and term acquisition is nothing but takeover of one company from another company. The main aim is to reduce operation costs, wealth maximizations. Mergers and acquisitions play an important role in the corporate finance world.Types of MergersMerges are classified into following types based on economic perspective and business combinations −Horizontal mergerVertical mergerConglomerate mergerMergers are also classified based on legal perspective into the following −Statutory mergerMerger of equalsShort form mergerSubsidiary mergerRightsBased on the percentage of shares held by the parent company, they will have ... Read More

Merger and acquisition is the process of joining two or more companies as one company either by combining them or by acquiring (one company purchases another company or companies) and form a larger business unit. Any transaction related to above deal is called as a Merger and acquisition deal.In merger and acquisition deals companies will do months of research on potential targets and after shortening them they further go deep and understand more about the company or companies (about their finances, operations etc.) and check their financial viability.Steps involved in M&A deal are as follows −Preliminary discussions.Evaluation and assessment of ... Read More

The issues in merger and acquisitions are as follows −Financial issues − Buyers will do the analysis of all the financial matters of sellers. It includes past statements, financial metrics and future performances. All monthly statements, audited reports, liabilities, assets, revenue margins, etc. are analysed by the buyer.Technology and intellectual property − Buyer sees technology and intellectual property of seller. It is observed what kinds of steps are taken by the seller to protect its properties, litigations. Moreover, it is observed what kind of licensed technology and how those can help the business, technology history, is there any patents (either ... Read More

Goods and service tax (GST) levies a single tax rate for all goods (supply) and services (not in India) whereas sales and service tax (SST) is the multiple tax rate system.GST is the indirect and unified tax rate levied on goods (supply) and services whereas sales and service tax is levied only once (tax levied on any taxable services carried out by individuals who are eligible for tax).Goods and service tax (GST)GST tax is levied on sales of goods, lease, exchange, supply or disposal (of goods and service). Items excluded from liquor, petroleum and natural gas, real estate. The GST ... Read More

GST is one of the major reforms in Indian taxation system. The main aim is to remove the cascading effect. Cascading effect is nothing but double taxation.GST is value addition tax which is imposed on goods and services (production, distribution and consumption).On the other hand value added tax (VAT) is an indirect tax imposed at every single stage of goods (manufacturing, distribution) on incremental value.Value added taxValue added tax (VAT) is levied by the state government at every single level of goods production and distribution. So the VAT system is a multiple point tax.In this tax system, purchase of goods ... Read More

Central sales tax (CST) is charged by the central government on interstate sales and collected by the state in which sales are made. Value added tax (VAT) is the multipoint tax collected at different stages of production and distribution.Central sales taxCentral sales tax (CST) comes under indirect tax levied by either central government or state government on sales. Retailers are responsible for collecting these taxes from customers and submit them to tax authorities.Central government levied tax on interstate sales whereas the state government levied tax on intrastate sales. Charges depend on commodities and can vary depending on commodities. Not all ... Read More

The term profit will differ from profession to profession. Businessmen will have different perspectives in terms of profit, economists will have different perspectives. According to accounts profit is nothing but excess of revenue over expenses.This profit is called accounting profit. Taxable profit had a different sense, amount taxable as per provisions of income tax act. Taxable profit is calculated by taking accounting profit, non-allowable expenses (added), allowable expenses (subtracted) and the resulting income is credited in a P & L account.Accounting profitIt results from operating activities and non-operating activities of the company. Accounting profit is the financial gain which is ... Read More

Acquisition strategy is the approach of acquiring products, services, and business by considering factors like brand, financial impact, culture, product etc. It plays a significant role in business expansion and plays part in growth of business.ElementsThe elements of an acquisition strategy are as follows −Business strategy − Talks about contracting approach (type of contracts, leasing arrangements etc.)Contracting strategy − Provides analysis and rationale.Major contracts − Identification of contracts and its types.Incentivise − Tells about incentives in detail.Technical data management − Long term technical data needs are assessed.Sustainment − Tells about acquiring integrated product support.StrategiesThe strategies of an acquisition strategy are ... Read More