Potential drawbacks of divestment

- There may be some loss of economies of scale. Fixed overheads would have a lower capacity to recover them.

- Cash generated may not be put to suitable use thereby reducing the returns.

Sell-off is a form of divestment and is sale of part of a company to a third party, generally for cash. It is a good way of raising cash and focussing on core business activities.

 

Posted Date: 9/2/2013 6:33:52 AM | Location : United States

Ask an Expert

Related Discussions:- Enumerate the potential drawbacks of divestment, Assignment Help, Ask Question on Enumerate the potential drawbacks of divestment, Get Answer, Expert's Help, Enumerate the potential drawbacks of divestment Discussions

Write discussion on Enumerate the potential drawbacks of divestment
Your posts are moderated

Write your message here..

Related Questions

Compute the economic order quantity, Q. Compute the economic order quantity... Q. Compute the economic order quantity? TNG has a current order size of 50000 units Average number of orders per year = demand/order size = 255380/50000 = 5·11 orders Ann

Role of sponsor, Role of Sponsor In the establishment of mutual fund tr... Role of Sponsor In the establishment of mutual fund trust, the main role is played by the sponsors. Both the trustees and the fund managers or the asset management company have

Futures and forward, what factors influence the decision to use futures or ... what factors influence the decision to use futures or forwards contracts

Evaluate the total expected present value of benefits, Question: Susan ... Question: Susan started her current job at age 30, with the normal retirement age at 60. The remuneration package of her employment includes the following benefits on top of he

Evaluate the fair value of the net assets, IFRS 3 Business combinations n... IFRS 3 Business combinations necessitate goodwill on gaining to be calculated at the date control is gained. The second gaining gives ROB a 75% holding and consequently control o

What are ratios of chromex plc, Ratios A great number of ratios might b... Ratios A great number of ratios might be appropriate for this purpose depending on the specific kind of financial performance which is being compared. Amongst those appropriate

Explain about the working capital management, Explain about the Working Cap... Explain about the Working Capital Management Working Capital Management is concerned with the management of current assets. It's a significant and integral part of financial m

Relative costs and benefits, Q. Relative costs and benefits? Option 1-... Q. Relative costs and benefits? Option 1- Factoring Reduction in receivables days = 15 days Reduction in receivables =15/365* £20m = £821916 Option 2 - The

Investor invest lion’s share of fund in domestic securities, Why do investo... Why do investors invest the lion’s share of their funds in domestic securities? Answer: Investors invest greatly in their domestic securities since there are major barriers to in

Issuance calendar, Issuance Calendar Issuance calendar gives clear and ... Issuance Calendar Issuance calendar gives clear and timely information about the borrowing program of the government. It clearly conveys the maturity profile of outstanding sto