Which of the Following Is Not a Manner in Which

question 43

Multiple Choice

Which of the following is not a manner in which companies have overstated their assets in a merger or acquisition?

• A) Using market values instead of book values
• B) Having the wrong entity act as purchaser
• C) Improperly allocating book values to assets
• D) None of the above, all are true.

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Definitions:

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to boost its long-term revenue.

Depreciation

The accounting method of allocating the cost of a physical or tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

EBIT

A financial metric that calculates a company's profit by including all costs except for interest and income tax expenses, known as Earnings Before Interest and Taxes.