Friday, 21 April 2017
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How to draw and interpret a Fibonacci retracement?
ReplyDeleteAlso, what is the significance of those percentage parameters?
Fibonacci Retracements are ratios used to identify potential reversal levels. Fibonacci Retracement is drawn by taking two extreme points on a stock chart. Ratios taken in Fibonacci Retracement are 23.6%, 38.2%, 50%, 61.8% and 100%.On these ratios, horizontal lines are drawn and used to identify support and resistance levels.61.80% is the most important ratio & known as Golden Ratio. It is the pullback zone.
DeleteHow Purchase Consideration is calculated in case of Amalgamation/Merger?
ReplyDeletePurchase consideration mainly involves calculations through 3 methods
DeleteNet asset method
Net payment method
Pooling of interest method.
Net asset method generally includes taking over of the real assets (i.e. excl. The fictitious assets) and the outside liabilities.
Net payment method is the one where the payment is decided by way of consideration to pref shareholders and equity shareholders irrespective of the net assets taken over.
Pooling of interest method is the one where the net-worth of the company is generally seen I.e. the paid-up share capital plus the reserves and surplus.
There could arise a goodwill or capital reserve due to above calculation
If purchase consideration is higher than net asset then there would be a goodwill
If the oppposite is the case there would be a capital reserve.
One should remember, as per companpies act, 2013 only goodwill or capital reserve can appear in the books.
They should be setoff before presenting in the balance sheet.
Basically there are several methods but we mostly look after 4 methods
ReplyDeleteNet asset method
Net payment method
Lump sum method
Intrinsic value or share exchange method
There are some other method also that depends upon case to case but these 4 are generally followed.
The intrinsic value method is a function of net asset method, afterall net assets are divided into no of equity shares after dedn of preference shares capital.
Delete