Under What Circumstances Are Mergers with or Acquisitions of Other

question 49

Essay

Under what circumstances are mergers with or acquisitions of other companies a better solution than entering into partnerships or alliances with these companies? How do mergers and/or acquisitions contribute to enhancing a company's position?

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Definitions:

Current Ratio

A financial metric assessing a firm's capability to cover its short-term debts using its short-term assets, determined by dividing current assets by current liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health.

Acid-test Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets.

Debt-to-equity Ratio

This proportion demonstrates the relative use of debt and shareholders' equity in the capital funding of a company's assets.