A Horizontal Merger

question 89

Multiple Choice

A horizontal merger

• A)is a merger between firms in the same industry.
• B)results in a trust (for example, the Standard Oil Company).
• C)is a merger between firms at different stages of production of a good.
• D)was illegal in the United States until the Federal Trade Commission Act was passed by Congress in 1914.

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Definitions:

Target Net Income

The specific amount of net income that a company aims to achieve within a certain period.

Margin Of Safety

A financial ratio or metric that measures the difference between actual sales and the breakeven point, indicating the extent to which sales can decline before a business incurs a loss.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Mixed Costs

Expenses that have both fixed and variable components, changing with the level of production but also incurring a base cost.