What Happens to the Outstanding Shares of the Target Firm

question 31

Multiple Choice

What happens to the outstanding shares of the target firm when the acquirer purchases 100% of the target's outstanding stock?

• A) They are added to the number of shares of Acquirer stock outstanding
• B) They are cancelled.
• C) They are converted into preferred stock.
• D) They are shown as treasury stock on the books of the combined companies.
• E) They are swapped for debt in the new company.

Apply knowledge of segmented income statements to evaluate the financial performance of business units.

Interpret the financial implications of costing decisions on a company's profitability.

Understand the principles of variable costing and its impact on net operating income.

Comprehend the calculation and comparison of unit product costs under variable costing and super-variable costing systems.

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Definitions:

Reallocation

The process of redistributing or reassessing resources, assets, or positions within an organization, system, or portfolio to optimize performance or efficiency.

Transportation Problem

A logistical issue involving the optimal distribution of goods or services from several sources to several destinations.

Routes Filled

The successful assignment or completion of pathways or delivery channels according to plan or schedule.

Dummy Sources

Artificial shipping source points created when total demand is greater than total supply to effect a supply equal to the excess of demand over supply.