If Company A buys Company B with the following metrics, what is the Accretion or Dilution for Company A? Use the provided pro forma share count below. Company A Company B Revenue 140 90 Net Income 45 25 Tax Rate 35.0% 30.0% Shares Outstanding 120 80 Share Price 10.00 7.00 Estimated pre-tax income acquisition adjustments 9 Estimated pro forma share count 190 3.9% -1.2% -1.8% -4.3% -6.7%

If Company A buys Company B with the following metrics, what is the Accretion or Dilution for Company A? Use the provided pro forma share count below. Company A Company B Revenue 140 90 Net Income 45 25 Tax Rate 35.0% 30.0% Shares Outstanding 120 80 Share Price 10.00 7.00 Estimated pre-tax income acquisition adjustments 9 Estimated pro forma share count 190 3.9% -1.2% -1.8% -4.3% -6.7%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Step 1: Given Data:

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Step 2: Calculate Combined Net Income after Acquisition:

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Step 3: Calculate EPS before the Acquisition for Company A:

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Step 4: Calculate Pro Forma EPS After Acquisition: Pro Forma EPS After Acquisition = Combined Net Income Pro

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Step 5: Calculate Accretion/Dilution:

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