Which of the Following Statements Regarding Acquirers and Acquirees Is

question 45

Multiple Choice

Which of the following statements regarding acquirers and acquirees is FALSE?

• A)The acquiree is usually the entity that has the largest minority voting interest in an entity that has a widely dispersed ownership.
• B)The acquirer is usually the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity.
• C)In a takeover, it is normally the larger company that takes over the smaller company.
• D)Normally, the entity that is the acquirer is the one that undertakes action to take over the acquiree.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; interest expense is often deductible for the borrower for tax purposes.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Stockholders' Equity/Total Assets

A ratio expressing the proportion of a company's assets that are financed by shareholders' equity.

Long-Term Debt/Stockholders' Equity

A financial ratio that measures a company's leverage by comparing its long-term debt to its stockholders' equity.