ABC IncIs Considering Merging with XYZ Corporation and the New Enterprise

question 20

Multiple Choice

ABC Inc.is considering merging with XYZ Corporation and the new enterprise will be called Alphabet Inc.One of the conditions of the merger being negotiated is the implication of XYZ's very positive reputation with its stakeholder groups.Regarding the reputation of XYZ,the negotiators must consider that a good reputation _________________.

• A) requires continuous effort to maintain
• B) enhances competitive positioning
• C) can be a liability
• D) All of the answers.
• E) None of the answers.

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Definitions:

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Common Size Statement

Financial statements that present all line items as a percentage of a common base figure, facilitating comparison across different periods or companies.

Liquidity Ratios

Financial metrics that measure a company's ability to pay off its short-term obligations with its liquid assets.

Return on Assets

Return on Assets (ROA) is a profitability ratio that measures the efficiency of a company in generating profit from its assets.