ACQUISITION PRICE PRINCIPLE Definition

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ACQUISITION PRICE PRINCIPLE see COST PRINCIPLE.

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RESTRUCTURING is the termination of employees and the reorganization of those remaining; can include reductions in plant and equipment. Restructuring is usually implemented to realize cost savings.

DAYS PAYABLE OUTSTANDING (DPO) is an estimate of the length of time the company takes to pay its vendors after receiving inventory. If the firm receives favorable terms from suppliers, it has the net effect of providing the firm with free financing. If terms are reduced and the company is forced to pay at the time of receipt of goods, it reduces financing by the trade and increases the firms working capital requirements. It is calculated: Days Payable Outstanding = 365 / Payables Turnover (Payables Turnover = Purchases / Payables).

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