Which of the Following Does NOT Correctly Complete This Sentence

question 49

Multiple Choice

Which of the following does NOT correctly complete this sentence: If cash is used to finance an acquisition, then _____________________.

• A) the shareholders of the acquiring firm will be better off than if stock were used regardless of whether or not the acquisition is a success in terms of value
• B) the cost of the acquisition will not depend on the acquisition gains
• C) the selling firm's shareholders will not fully participate in the gains of the merger
• D) the transaction is usually taxable
• E) control of the acquiring firm will not be affected

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Definitions:

Net Sales

Total sales revenue minus returns, allowances, and discounts.

Gross Profit

Gross profit refers to the difference between revenue and the cost of goods sold before administrative, overhead, and other expenses.

Receivables Turnover Ratio

A financial metric that measures a company's effectiveness in extending credit and collecting debts, calculated by dividing net credit sales by the average accounts receivable.

Net Sales

The amount of sales revenue remaining after deducting returns, allowances for damaged or missing goods, and discounts.