If the P/E Paid Is Greater Than the P/E of the Acquiring

question 112

Multiple Choice

If the P/E paid is greater than the P/E of the acquiring company, the effect on the earnings per share of the acquired company will be

• A) positive.
• B) uncorrelated.
• C) negative.
• D) neutral.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.