Empirical evidence indicates that the returns to shareholders of the target firm vary significantly from the returns to the shareholders of the acquiring firm. Identify the shareholders that tend to realize the smaller return and provide some possible explanation for these low returns.

Q: lities for both companies. Which company do you think is in a better position? Compare the general…

A: For analyzing the trends we need to examine the percentage changes in each item of current and…

Q: Which of the following statements is incorrect? Select one: A. It is possible for markets to be…

A: According to the efficient market hypothesis, all the information available in the market is…

Q: How do the DuPont technique helps the firm’s managers to further analyze its returns?

A: DuPont analysis is referred to as the framework regarding the analysis of the fundamental…

Q: What are the elements of uncertainty for internal shareholders that remain or are introduced when…

A: elements of uncertainty for internal shareholders  are discussed below

Q: Should we use (1) total sales, (2) EBITDA, (3) EBIT, or (4) net income to evaluate firm…

A: The choice of financial performance indicators to use depends on the specific goals and…

Q: Explain the effect of D/E on asset returns, equity returns (assuming that cost of debt is not…

A: Three main actors of production namely land, labor and capital are given primary importance. Capital…

Q: Does the use of universes of managers with similar investment styles to evaluate relative investment…

A: The use of universes of managers with similar investment styles to evaluate relative investment…

Q: risk implications of improving net profit margin to increase Return on Equity?

A: Net profit margin is the percentage of net profit to sales revenue

Q: There will likely be a difference between your calculation of the Company’s intrinsic value and its…

A: Intrinsic value is the true or inherent value of a company. It is a fundamental value which is…

Q: Which of the following statements regarding EVA is NOT CORRECT? Group of answer choices: EVA assumes…

A: EVA represents the increment in the return on investment of the company. If the EVA is not positive,…

Q: ou observed that high-level managers make superior returns on investments in their company’s stock.…

A: The Efficient Market Hypothesis (EMH) is a theory in finance that states that financial markets are…

Q: Evaluate the following:Managers should not focus on the current stock value because doing so will…

A: The stock price of the company reflects all the future cash flows that the entity is expected to…

Q: “An improvement in earnings growth can be achieved at the expense of market share (i.e., an…

A: Answer: Usually, earnings growth rate is nothing but a percentage increase in EPS of a company over…

Q: Choose the correct. Which of the following is not included in the assumption on which Myron Gorden…

A: Gorden Proposed Model: The market value of share is equal to the present value of future dividends.…

Q: A financial manager's goal of maximizing current or short-term earnings may not be appropriate…

A: Financial manager is a person who controls or monitors the overall finances of the company.…

Q: Can you identify a possible explanation for the company’s declining profits? If so, what is it?

A: Company's declining profits can be possible due to overhead expenses.  Overhead costs are the…

Q: Which of the following statements is false regarding the abnormal earnings approach to valuation?…

A: Abnormal earning valuation This method of valuation helps to determine company’s net worth based on…

Q: Which one is more appropriate for cost of retained earning? A. Weighted Average cost of capital…

A: Retained earnings are the part of net income that is not distributed to the shareholders in form of…

Q: Respond to Jerry’s criticism that shareholders’ equity does not represent the marketvalue of the…

A: Balance sheet: This financial statement reports a company’s resources (assets) and claims of…

Q: How would non-financial performance indicators help to improve the performance of the company?…

A: Introduction: In its most basic form, non-financial performance metrics give information on a…

Q: Why does income smoothing generally lead to a higher share value? a. It reduces the perceived risk…

A: Income smoothing is the act of using accounting methods to level out fluctuations in net income from…

Q: Would a firm that has many good investment opportunities be likely to have ahigher or a lower…

A: We can measure the average worth of the company through dividend value. The dividend payout ratio is…

Q: The weak form of the efficient market hypothesis implies that: CHOOSE ONE   A. Investors can…

A: As per the EMH, the future prices of shares cannot be predicted based on historical data or any…

Q: which:     successful strategies will not be reflected in accounting profits for a number of…

A: There are activities whose usefulness or potential cannot be measured in terms of money and they…

Q: ly based on tax rate structure may be less than optimal.

A: Equity: This is one of the tax system evaluationcriteria pertaining to the concept of equal or…

Q: To evaluate a company’s performance, investors need a benchmark to which they can compare its…

A: Financial ratio is defined as an accounting ratio, which used to choose two main numerical value for…

Q: The PE ratio is a very common method used by investors to get a quick calculation on the market’s…

A: P/E ratio is one of most common methods of valuation of company and P/E ratio compare price of stock…