Which one of these is the least probable reason why a firm may want to divest...

Which one of these is the least probable reason why a firm may want to divest itself of some of its assets?

To cash out a profitable operation
To raise cash
To improve the strategic fit of its various divisions
To comply with antitrust regulations
To increase market share

Solutions

Expert Solution

Divestment is done to remove a division which is a part of the business's non core operations and thus focus completely on it's core business. It is also done to remove a non -profitable division from the business, remove a division which is not strategically fit and removing it might improve the strategic fit of other divisions. It also can be used to increase the market share and to comply with the anti trust regulation by divesting those divisions which do not comply with the regulations. It helps to generate cash by selling of its divisions which are not performing well or not in sync with the current operations. Divestment is also done to increase market share, if the existing market share is too small.

Divestiture never removes the profitable operations and generates cash out of it, it is done to remove the unmanageable, unprofitable and unrelated division.

So, the correct option is option A.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

List at least one reason why: The seller of a home might wish to elect out...

List at least one reason why: The seller of a home might wish to elect out of the IRC section 121 exclusion An owner of depreciable real property might consider electing the alternative depreciation system of IRC section 168(g)

Describe in detail the reason why a firm that chooses to locate in one country over...

Describe in detail the reason why a firm that chooses to locate in one country over another country i.e. country specific characteristics -Use real world examples that support your answer

Which of the following is NOT a reason why two different sources may have different beta...

Which of the following is NOT a reason why two different sources may have different beta values? A. The market proxy that was used for calculation may have been the S&P500 instead of the Nasdaq B. 2 years of data may have been used to calculate beta instead of 5 years. C. Weekly returns may have been used instead of monthly returns D. Beta is a measure of risk.

Discuss at least one reason why a company would buy back its own stock and provide...

Discuss at least one reason why a company would buy back its own stock and provide an example to support your points. Also, discuss any potential negative effects of the stock repurchase. Please support using a scholarly source.

1. Which of the following is a reason why brands matter to consumers? Select one: a....

1. Which of the following is a reason why brands matter to consumers? Select one: a. means of legally producting unique features b. source of competitive advantage c. source of financial returns d. risk reducer 2. A product so basic that it cannot be physically differentiated in the minds of consumers is a(n): Select one: a. credence product b. commodity c. convenience good d. shopping good 3. A customer who regularly buys Pink from Victoria's Secret is expressing brand: Select...

(14.43) One reason why the Normal approximation may fail to give accurate estimates of binomial probabilities...

(14.43) One reason why the Normal approximation may fail to give accurate estimates of binomial probabilities is that the binomial distributions are discrete and the Normal distributions are continuous. That is, counts take only whole number values, but Normal variables can take any value. We can improve the Normal approximation by treating each whole number count as if it occupied the interval from 0.5 below the number to 0.5 above the number. For example, approximate a binomial probabilityP(X⩾10)P(X⩾10)by finding the...

Provide 3 reason related why Motorola Corporate stakeholders may decide not to relocate in China? One...

Provide 3 reason related why Motorola Corporate stakeholders may decide not to relocate in China? One of the reason is worker welfare

Which of the following is not a reason for which a company may purchase treasury stock?...

Which of the following is not a reason for which a company may purchase treasury stock? A. to increase net assets by buying low and selling high B. to avoid a takeover by an outside party by increasing the number of outstanding shares that have voting rights C. to support the company's stock price D. to reward valued employees with stock

Which of the following best states why why in the short run a firm may decide...

Which of the following best states why why in the short run a firm may decide to continue to produce, even with economic losses? Select one: a. Price is greater than average variable cost but less tha average total cost . b. Total revenue is greater than total variable cost but less than total cost. c. All of the above are reasons for continuing production. d. One of the above is incorrect. e. Economic losses areless than fixed cost.

Reason why Malaysian are under-insured. At least 5 examples (40m)

Subjects