Article Abstract:
Earnings and profits (E&P) studies and tax balance sheets are useful accounting tools that are often overlooked by businesses. E&P studies allow companies to determine if their cash distributions to stockholders are taxable. E&P calculations involve determining taxable income and deducting items that are deductible for E&P calculations, but not federal income taxes. Additionally, E&P calculations involve determining if the final distribution is taxable. Tax balance sheets are useful because they show current and past differences between tax returns and the financial books, and compute their tax consequences. Tax balance sheets are also required under the Federal Accounting Standard 96 'Accounting for Income Taxes'.
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Article Abstract:
Supplier price analysis allows buyers to negotiate better prices and increase their knowledge of various industries. Supplier price analysis involves examining suppliers' industries and their positions within them to determine suppliers' pricing criteria. The process involves: determining relationships between prices and sales volumes; determining suppliers' materials costs; and calculating the incremental cost of goods sold. Buyers can use results to negotiate savings in the areas of overhead, administrative costs, and research.
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Article Abstract:
The successfully executed merger has a synergistic effect on the output of the participants. The newly formed company should produce more than the total of the two previously existing companies. This means corporate growth and enhanced profitability. Using acquisitions to hedge business risks through diversification, a common practice in the 1960s, is no longer fashionable. The acquisitions most likely to produce a synergistic effect are horizontal integrations that expand product lines or geographic marketing areas.
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