Pappelbon Enterprises Recently Acquired a Chain of Convenience Stores Offering

question 15

Multiple Choice

Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food.Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense.All of the following statements accurately reflect this EXCEPT:

• A) Pappelbon did not fully evaluate the target.
• B) Pappelbon overpaid.
• C) Pappelbon's due diligence was not fully effective.
• D) Pappelbon's management was overly focused on acquisitions.

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Definitions:

Cash Equivalents

Brief-term investments with high liquidity, capable of being readily turned into fixed cash sums, and facing a negligible risk of value shifts.

Receivables

Amounts owed to a company by its customers from the sale of goods or services on credit.

Inventory

A company's raw materials, work-in-process goods, and completely finished products that are considered to be part of its current assets.

Prepaid Expenses

Expenses paid in advance for services or goods to be received in the future, such as insurance premiums or rent.