Mergers That Attempt to Bootstrap Earnings May Obtain Increased Current

question 1

Multiple Choice

Mergers that attempt to bootstrap earnings may obtain increased current earnings per share at the expense of:

• A) a higher price-earnings ratio.
• B) higher total combined market value.
• C) reduced future growth prospects.
• D) increased free cash flow.

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Definitions:

Strategic Environment

The external and internal factors that influence an organization's strategy and strategic planning processes.

Organizational Culture

The collection of values, beliefs, behaviors, customs, and attitudes that characterizes an organization and guides its practices.

Derived Demand

The demand for a good or service that arises from the demand for another good or service, for example, the demand for steel being driven by the demand for automobiles.

Noncustomers

Individuals or entities that are currently not purchasing or using a company's products or services but could potentially be converted into customers.