Asked by
Yoshimi Salazar
on Nov 07, 2024
Verified
If an acquisition does not create value, then the:
A) Earnings per share of the acquiring firm must be the same both before and after the acquisition.
B) Earnings per share can change but the stock price of the acquiring firm should remain constant.
C) Price per share of the acquiring firm should increase because of the growth of the firm.
D) Earnings per share will most likely increase while the price-earnings ratio remains constant.
E) Price-earnings ratio should remain constant regardless of any changes in the earnings per share.
Price-Earnings Ratio
A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or undervalued.
Earnings Per Share
A company's profit divided by the number of outstanding shares of its common stock, indicating the portion of a company's profit allocated to each share of stock.
Acquisition
The act of obtaining control of another corporation, either through purchase or merger.
- Analyze the impact of mergers and acquisitions on company performance.
Verified Answer
JA
Learning Objectives
- Analyze the impact of mergers and acquisitions on company performance.