An Acquiring Firm Can Increase Its Earnings Per Share (EPS)by

question 14

Multiple Choice

An acquiring firm can increase its earnings per share (EPS) by:

• A)Acquiring a firm with a lower P/E ratio than its own P/E ratio.
• B)Acquiring a firm with a higher P/E ratio than its own P/E ratio.
• C)Acquiring a firm with a higher leverage ratio than its own leverage ratio.
• D)Acquiring a firm with a lower leverage ratio than its own leverage ratio.

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Definitions:

Unlimited Demand

A market scenario where the desire for a product surpasses the available supply at any price.

Constrained Resource

A limiting factor or scarce resource in a production process that restricts the company's ability to meet demand.

Current Profitability

A measure of the current efficiency and performance of a business in generating profit, often assessed over a short-term period.

Constrained Resource

Refers to a limited factor that restricts a company's ability to produce goods or services, such as a machine with finite capacity or limited labor.