Features, advantages and disadvantages of marginal cost

Meaning of Marginal cost

Chartered Institute of Management Accounting (CIMA) defines the term marginal cost that it excludes fixed overhead cost entirely from cost of production but charged against ‘fund’ which arises out of excess of selling price over total variable cost.

So it is the amount at any given volume of output by which total cost is changed if the volume of output is increased or decreased by one unit. Continue reading

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Meaning of subsidiary company

Subsidiary company

Last time we have discussed the meaning and types of holding company. Today we will discuss another type pf company that is subsidiary company. The company whose shares have been acquired is subsidiary company. A company can be subsidiary of another company if following conditions fulfilled.

1)      A company can be subsidiary of another company if other company controls the composition of the board of directors.

2)      If a company acquires more than the 50% equity shares of any other company.

3)      Also there is the case when it becomes the subsidiary of another company which itself is a subsidiary of a third company. For example: if R is the subsidiary of Y and Y is subsidiary of X than R would subsidiary of both Y and X.

There is a wholly owned subsidiary company which means when a holding company acquires 100% shares of subsidiary company.

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Types of holding companies

Holding company

A company which acquires more than 50% equity shares of any other company in order to control the composition of its board of directors, it is called holding company. Holding company’s main aim is to eliminate the competition, to achieve the economies of production and to obtain the economies of management. Continue reading

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4 Methods of purchase consideration

Purchase consideration:

As per section 14 it is the price paid by Transferee Company to the transferor company for the purchase of its business.

Methods of purchase consideration:

 There are different methods of purchase consideration depending upon the terms and conditions settled between the transferor company. Continue reading

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3 Methods of valuation of shares

Valuation of shares

Generally shares of the company are valued at the following cases:

1)      At the time of the assessment by income tax authority.

2)      At the time of the raising loans.

3)      At the time of the paying court fee.

4)      At the time of the valuing the assets of the company.

5)      At the time of the purchase and sale of the shares in private company. Continue reading

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Meaning of liquidation of companies

Liquidation of companies means by which affairs of company wound up by law. A company can not die natural death as it is created by law.

Liquidation of companies is done by three ways:

1)      Compulsory winding up by court

2)      Voluntary winding up by members

3)      Winding up under the supervision of court Continue reading

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5 differences between correlation and regression

Last time we have discussed the concept of regression analysis. Let us discuss the difference between correlation and regression.

CORRELATION

1 ) correlation means relationship between two or more variables.

 

 

2) It is only a tool of ascertaining the degree of the relationship between two variables therefore we cannot say that one variable is the cause and other the effect.
3) There may be non sense correlation between two variables. Like correlation between income and weight.

4) It is independent of change of scale and origin.

5) It is confined only two the study of linear relationship between variables.

REGRESSION

1) It means stepping back and returning to average value. It is the measure of average relationship between two or more variables in terms of the original units of data.

2) It indicates the cause and effect relationship between the variables as one variable is taken as dependent while other as independent.

 

3) There is no such thing like non sense regression.

 
4) It is independent of change of origin not scale.

5) It studies linear as well as non linear relationship between the variables.

These are the 5 differences between correlation and regression

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