From the course: Corporate Finance: Profitability in a Financial Downturn

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Asset divestiture

Asset divestiture

From the course: Corporate Finance: Profitability in a Financial Downturn

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Asset divestiture

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- Have you ever done spring cleaning in-house to get things in order? Well, asset disposition and divestiture is very similar, but for companies. You're getting rid of assets that don't have any value for your organization, but if you get rid of them it could be a valuable thing to do. Think about a rusted, broken down truck, old, obsolete computers, or a branch of your business that isn't profitable. They bring you no value, but they might for someone else. There are many different reasons why you might want to dispose of or divest yourself of an asset. First of all, you may consider that the assets aren't profitable or they have low ROIs. This means they're just not worth owning. Assets that aren't profitable don't make you any money and you need to be profitable. Assets with low ROI might not be as good as other assets you own in your business and might add more value if you'd sell them rather than continue to…

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