Selling assets

An entrepreneur who becomes the owner initially creates a firm with a personal investment. Then, the new firm purchases and sells assets, collects receivables, pays liabilities, and conducts many other business activities called transactions. Each transaction must be evidenced with a business document. For example, a business entity that purchases office furniture costing 500 by paying 200 in cash and the balance of 300 on credit should provide the accountant with a purchase invoice verifying the price and quantity, a check stub of the owner s checkbook or a receipt for a cash payment, and a bill that the balance of 300 is due in 30 days (an accounts payable). These documents evidence accounting information used by accountants and are available for current and future review by independent certified public accountants. 

Finally, Merton s model assumes that when the value of firm is lower than the value of debt, equity holders sell assets in order to fulfill their... 

A 2005 beneficiary survey found that the PSNP has had a significant positive effect on beneficiaries well-being as calculated by both subjective and objective indicators. The survey found that three in five beneficiaries avoided having to sell assets to buy food in 2005, and according to 90 percent of the households, this was a result of their participation in the PSNP. Almost half the beneficiaries surveyed stated that they had used health care facilities more in 2005/6 than in 2004/5, and 76 percent of these households credited the PSNP with this enhanced access. More than one-third of surveyed households enrolled more of their children in school 80 percent of them attributed this to participation in the PSNP... 

Reported as one of the worst incidents in the petroleum industry due to widespread environmental impact. Increased regulatory safety requirements for offihore drilling in the USA, with emphasis on blowout prevention measures. Company stock quickly lost over 30% of its value. Company had to sell assets to cover cost impact. BP CEO was later replaced. 

To compute this value, assume that we purchase an option and at the same time short (i.e., sell assets we don t actually have - this is often possible and legal) a quantity A of the underlying asset. The value of this portfolio is H = F(S, t) — AS. Applying (7.162), the... 

The key to the discounted cash flow methods is the determination of a proper interest rate. For this, two factors must be known. One is how much does it cost to obtain money The second is what is a reasonable amount of profit to expect from a plant The first depends on the source of money. This can be corporation earnings, the sale of stock, the issuance of bonds, the selling of assets, or borrowing from some outside source. The second depends on economic conditions. 

The value of the assets is their value to the company. If they were to be sold on the open market they could not be sold at this price. For instance, if a person won a 3,600 new car in a sweepstakes contest and decided to sell it immediately, he probably could not get over 3,000 for the car. Very few people would want all the optional extras on the car they generally would want to trade in an old car that he would not want they expect the seller to repair it if something is faulty, something he ordinarily could not do and most people would not trust him as much as the dealer who has been in business 25 years. 

Investors, however, like companies that have large tangible assets, because they think they have a better chance of getting their money back should the company become bankrupt. The tangible assets are the undepreciated assets of the company. So if a company is interested in selling bonds, it looks better if it has depreciated its assets slowly. As a result, some companies keep dual books-one for the public and the other for the Internal Revenue Service. There is nothing illegal about this. The capitalized cost minus the amount that has been depreciated is called the book value of the asset. This may be above, below, or the same as its resale value. 

Death. Life insurance is an important part of an overall financial plan, but see it for what it is. Don t get led into buying life insurance as an investment. Sales commissions and administrative costs run high. In retirement, minimize coverage since you will have other assets to cover living costs for survivors. Look into converting existing whole life policies to paid-up insurance. If you have a policy that pays dividends, consider having the dividend applied to the premium. One insurance feature that is attractive to retired couples is the second-to-die policy. This policy provides cash to help with estate taxes and thus eliminates the need to sell other assets when the estate passes to children. 

The second real danger lies in exiting the acquired assets. Buyout firms are forced to sell portfolio companies at the end of the predefined limited lifetime of their funds. It is no secret that this has become more problematic in recent years and that the average retention time of assets has increased. In fact, relatively few have managed to successfully divest in the past few years and exiting portfolio companies is one of the top issues for private equity players operating in the chemical sector. 

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