Divestitures are commonly used words for effective management of company portfolio and to achieve financial goals. There are different methods in divestiture, commonly used are spin-offs, care-outs, split-offs and split-ups.Spin-offsIt is the term used for newly formed independent companies which are formed from parent companies. In these spin-offs the parent company sells their existing shares to its existing shareholders.AdvantagesThe advantages of spin-offs are as follows −Using spin-off methods companies can increase their profits. They can attract new shareholders.They can set and achieve their own goals by following their business models.Provides security to shareholders.Employees can explore their individuality and vision.Newly formed ... Read More

For effective management of their portfolio to achieve financial goals companies use various divestiture methods like spin-offs, split-ups, carve-outs and split offs. These are commonly used corporate actions to ensure potential growth of both business and shareholders wealth.Split-upsAs the name suggests, split-ups are nothing but company splitting of parent organizations into two or more independent or separate companies. Stocks of parent organizations may be traded for newly formed companies. There may be many reasons for split-ups, some of them are strategic decisions to recondition their operations, companies need different company lines, in terms of funds, resources etc.Investors can take advantage ... Read More

Business faces some challenges and they need various plans to improve their financial conditions. Challenges may relate to cash, less profits, debts etc. to improve their financial conditions they need to sell their assets.Spin off and divestitures are two such procedures that help business. People sometimes confuse terms like selling and distributing but they differ with their objectives and principles.Spin offA new company is created by selling some of parent company shares is called spinoff. This newly formed company has its own management and rules and technical support will be given by the parent company, if needed.Based on the need ... Read More

Before going for a spinoff and split off. Let us get an idea about Divestiture. Divestiture is nothing but selling a part of a division to create a separate company or another company. It is called the process of divestment.Divestiture can be spin -off, split – off, split-up, equity carve – out etc. commonly used forms of divestiture are spin-off and split-off. Spin-off refers to business division, which becomes independent after separation. In the split off company holds some shares in the subsidiary.Spin-offSplit off is a type of divestiture where a part of the business is disjoined and creates a ... Read More

Before going for financial synergy, let us understand the word synergy which is commonly used in merger and acquisition. Synergy can be understood as, the combined value and performance of a merged company is always greater than the value and performance of individual companies (which are merged).Synergy can be formulated as below −                     Value of merged companies > value of individual companiesLet say two companies, X and Y are merged, now synergy can be formulated as$$\mathrm{Value\:of\:(X+Y)>\:Value\:of\:X\:+\:Vale\:of\:Y}$$In both, financing activities and operating activities synergies can arise the following −Financial synergy − Arises ... Read More

Performance and value of a merged company in more than their individual value and performance is called synergy. Let us see the buyer’s perspective, it influences the maximum price they pay for the company. Let us see the seller’s perspective, favoring a higher purchase price. Important point to keep in mind is that synergies vary from one combination to another business.Revenue synergy results in generating more sales for a combined company (after merger) than the companies which are able to generate individually (before merger). If a company acquires another company (its competitor), then, both the companies can increase their client ... Read More

Concept of synergy is that the performance and value of combined companies is greater than individual performance and value. Merger is called synergy merger, if companies merge to create higher efficiency.Factors which contribute to the synergy are revenue, technology, cost reduction and talent. Synergy can also be done in products by cross selling the new products to increase their revenues. Sometimes, synergy can adversely affect, if the merger is poorly executed and has over optimism.TypesThe types of synergies are explained below −Revenue synergy − In this synergy, the companies will go for merger and acquisition to increase their sales by ... Read More

Intellectual property comprises patents, trade secrets, trademarks and copyrights. In this we see about patents and trade secrets. Though both the words have a lot in common with new ideas, innovativeness etc. They differ from each other in some aspects like patent information can be shared where trade secret information can’t be shared. There are many more. In this we see the overview of both and their differences.PatentThe original author or the person who registered first will get an exclusive right for a limited period of time on claimed matter. Patents act as a shield to the author, it prevents ... Read More

The term intellectual property tells about different types of legal rights. The word intellectual property covers different areas like trademarks, copyright, design and patents. Though all the four look the same or used in the same context (in general), every word differs from another in many ways.In this let us see the overview and differences between patent and trademark.PatentPatent is a legal right granted by respective government authorities to the original owner or author who applied first. This right is useful from others in making, using, selling for a timeframe. To get this right the author has to register with ... Read More

What is Net Current Assets Turnover Ratio?The net current assets turnover ratio expresses the ability of a company’s working capital in promoting the sales of the company. Net current assets are also known as working capital. The ratio shows to what extent the day-to-day expenses fuel the net sales of a company. In other words, the ratio is an expression of net sales that occur per unit of net current assets.$$\mathrm{\mathrm{Net\: current\: assets\: turnover \:ratio}\:=\:\frac{\mathrm{Net\: Sales}}{\mathrm{Net\: Current\: Assets}}}$$Here, Net Current Assets = Current assets - Current LiabilitiesNet sales - Total Sales - Total returns (Inwards)Calculation of Net Current Assets TurnoverBy ... Read More