Which of the Following Statements Regarding Recapitalisation as a Takeover

question 41

Multiple Choice

Which of the following statements regarding recapitalisation as a takeover defence is FALSE?

• A)Restructuring itself can produce efficiency gains, often removing the principal motivation for the takeover in the first place.
• B)In many cases, a substantial portion of the synergy gains that an acquirer anticipates from a takeover are savings from a decrease in leverage as well as other cost reductions.
• C)Another defence against a takeover is a recapitalisation, in which a company changes its capital structure to make itself less attractive as a target.
• D)By increasing leverage on its own, the target firm can reap the benefit of the interest tax shields.

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Definitions:

Direct Labor

The wages and related benefits of employees who are directly involved in the production of goods or services.

Materials Requisition

The process of requesting and withdrawing materials from inventory for use in the production process or for other operational needs.

Source Document

An original record, such as an invoice or receipt, that evidences a business transaction.

Indirect Materials

Indirect materials are those materials used in the production process but are not directly traceable to specific products, such as lubricants for machinery.