☆Free Stock Market Basics course in chennai☆Free Share Market Basics course in chennai ☆Free Study Material for Every course ☆ EQUITY MARKET ANALYSIS COURSE☆ COMMODITY MARKET ANALYSIS COURSE ☆ FOREX MARKET COURSE☆ NCFM COURSE (Only weekend Classes) ☆ TECHNICAL ANALYSIS COURSE (Only weekend Classes) ☆ INTRADAY TRADING SOFTWARE ☆ STOP LOSING MONEY-LEARN & EARN WITH 100% FINANCE PROTECTION☆WE CONTINUE OUR SUPPORT AFTER COURSE☆FREE PORFOLIO SERVICE FOR MIDDLE CLASS INVESTORS ☆

What is swap ratio?

What is swap ratio?
Swap ratio is an exchange ratio used in case of mergers and acquisitions. It is the ratio in which the acquiring company offers its own shares in exchange for the target company's shares. To calculate the swap ratio, companies analyze financial ratios such as book value, earnings per share, profits after tax as well as other factors, such as size of company, long-term debts, strategic reasons for the merger or acquisition and so on.

For example, if company A is acquiring company B and offers a swap ratio of 1:5, it will issue one share of its own company (company A) for every 5 shares of the company B being acquired. In other words, if company B has 10 crore outstanding equity shares and 100% of it is being acquired by company A, then company A will issue 2 crore new equity shares of company A to the shareholders of company B, proportionately.