If a Firm Generates Excessive Debt After an Acquisition, Credit

question 2

Multiple Choice

If a firm generates excessive debt after an acquisition, credit rating agencies will reduce its credit rating. This reflects the fact that the firm

• A) is likely to become an acquisition target itself.
• B) did not perform adequate due diligence before the acquisition.
• C) has become overdiversified.
• D) is a riskier investment.

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Definitions:

Understanding

The ability to comprehend, grasp, or make sense of something, including concepts, behaviors, or processes.

Information Shared

The dissemination of data, facts, insights, or knowledge among stakeholders to facilitate decision-making processes, collaboration, or awareness.

Decisions Made

Refers to the conclusions or judgments reached after consideration, leading to actions taken or strategies implemented.

Operating Effectiveness

The efficiency with which an organization can achieve its objectives through the optimal use of resources.