Disinvestment
1. The action of an organization or government selling or liquidating an asset or subsidiary. Also known as "divestiture".
2. A reduction in capital expenditure, or the decision of a company not to replenish depleted capital goods. Investopedia Says:
1. A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.
2. A company will likely not replace capital goods or continue to invest in certain assets unless it feels it is receiving a return that justifies the investment. If there is a better place to invest, they may deplete certain capital goods and invest in other more profitable assets.
Alternatively a company may have to divest unwillingly if it needs cash to sustain operations. Related Terms:
Capital Expenditure - CAPEX
Capital Goods
Divestiture
Return On Assets - ROA
Return On Equity - ROE
Return On Investment - ROI |