ito na guys ung report q Wholly Owned Subsidiary A company that, while theoretically publicly-traded, has all of its common stock owned by a single company. Some wholly owned subsidiaries belong to the same industry as the parent company, while others do not, and are part of a diversification effort on the part of the parent company. A wholly owned subsidiarys board of directors is directly appointed by the parent company, and is ultimately responsible to the shareholders of the parent company. Some wholly owned subsidiaries were once part of the parent company but were spun off, while others were smaller companies bought outright by their parent companies. See also: Holding company. Wholly Owned Subsidiary What it is: -A wholly owned subsidiary is a subsidiary company whose parent company owns 100% of the companys outstanding common stock. How it works/Example: In a wholly owned subsidiary, the parent company owns all of the shares of the company and there are no minority shareholders. The subsidiary continues to operate with the permission of the parent company. The parent company may or may not have direct input into the subsidiary operations and management. A company may continue the operations of a wholly owned subsidiary rather than merge and integrate their operations for a variety of reasons. For example, the subsidiary may be located in a country different from that of the parent company. Having a subsidiary may be important for a variety of tax and tariff reasons. Another reason may be to preserve the brand and identity in of the wholly owned subsidiary. Why it Matters: Wholly owned subsidiaries enable holding companies (i.e. the parent company) to maintain operations in diverse geographic areas, market areas, and even entirely separate industries, creating an important hedge against changes in the market, geopolitical and trade practice changes, and declines in industry sectors. Related Terms • Economic Profit • Short Squeeze • • Preferred Shares • Fixed Costs • Operating Profit • Earnings Before Interest, Tax, Depreciation, Amortization, and Restructuring or Rent Costs (EBITDAR) • Joint Tenants in Common (JTIC) DEFINITION of Economic Profit (Or Loss) The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used. This can be used as another name for economic value added (EVA). Joint Tenants When two people take title as joint tenants on a deed, each person has a 50 percent ownership of that piece of property. If one person dies, the other person automatically owns 100 percent of the property. This is because a joint tenancy automatically gives each person a "right of survivor ship," where the surviving grantee takes all. Many states, including California, consider married couples joint tenants even if the deed does not state it. This form of tenancy is similar to a couple taking title on a deed that states the real estate is community property in California, per Section 682.1 of the California Civil Code. Tenants in Common 1. Tenants in common provides for multiple percentages of ownership interest, if desired, and inheritance rights for the heirs of each grantee. When someone who is a tenant in common with another person dies, the interest the deceased person has does not automatically pass to the other owner Short squeeze is a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock. Short squeezes result when short sellers cover their positions on a stock. Preferred share Definition Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preferred shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, a preferred share pays a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preferred share is that the investor has a greater claim on the companys assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred, non-cumulative, participating, and convertible. also called preferred stock. DEFINITION OF OPERATING PROFIT The profit earned from a firms normal core business operations. This value does not include any profit earned from the firms investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes. DEFINITION OF FIXED COST A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of a good or service, along with variable cost. DEFINITION OF EARNINGS BEFORE INTEREST & TAX - EBIT An indicator of a companys profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT is also referred to as operating earnings, operating profit and operating income, as you can re-arrange the formula to be calculated as follows: DEFINITION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION, AND RESTRUCTURING OR RENT COSTS - EBITDAR A non-GAAP indicator of a companys financial performance calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, amortization and restructuring or rent costs) Depending on the company and the goal of the user, the indicator can either include restructuring costs or rent costs, but usually not both. The EBITDAR indicator expands on EBITDA by adding an additional excluded item to give a better indication of financial performance. INVESTIGATOR EXPLAINS EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION, AND RESTRUCTURING OR RENT COSTS - EBITDAR Rent is included in the measure when evaluating the financial performance of companies, such as casinos or restaurants, that have significant rental and lease expenses derived from business operations. By excluding these expenses, it is easier to compare one company to another and get a clearer picture of their operational performance. Restructuring is included in the measure when a company has gone through a restructuring plan and has incurred costs from the plan. These costs, which are included on the income statement, are usually seen as nonrecurring and are excluded to give a better idea of the companys ongoing operations.
Posted on: Sat, 24 Jan 2015 13:29:05 +0000
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