The difference between merger and consolidation. Introduction : Merger: It is defined as a process of the statutory and contractual combination of two or more organizations when they agree to merge into one entity. In this process, the company taking over remains active while the other one becomes dormant and ceases all its operations. Cons olidation: It is a process of the contractual combination of two or more organizations in which all the joining companies cease to exist and an entirely new entity is created, which is called the successor entity.

Question

Want to see the full answer?

Answer 1

Question

Chapter 20, Problem 2DQ

Summary Introduction

To explain: The difference between merger and consolidation.

Introduction:

Merger:

It is defined as a process of the statutory and contractual combination of two or more organizations when they agree to merge into one entity. In this process, the company taking over remains active while the other one becomes dormant and ceases all its operations.

Consolidation:

It is a process of the contractual combination of two or more organizations in which all the joining companies cease to exist and an entirely new entity is created, which is called the successor entity.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Need the WACC % WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Debt-to-Value Ratio (wd) Market Equity-to-Value Ratio (ws) Market Debt-toEquity Ratio (D/S) Before-Tax Cost ofDebt (rd) 0.0 1.0 0.00 6.0 % 0.10 0.90 0.1111 6.4 0.20 0.80 0.2500 7.0 0.30 0.70 0.4286 8.2 0.40 0.60 0.6667 10.0 F. Pierce uses the CAPM to estimate its cost of common equity, rs, and at the time of the analaysis the risk-free rate is 5%, the market risk premium is 7%, and the company's tax rate is 25%. F. Pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 1.4. Based on this information, what…

Ned's Co. has an average collection period of 45 days and an operating cycle of 130 days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of $20. Beginning receivables for the quarter amount to $35. Sales for the first and second quarters are expected to be $110 and $125, respectively, while purchases amount to 80% of the next quarter's forecast sales. The accounts payable period is 90 days. What are the cash disbursements for the first quarter? Question 4 options: $92 $88 $76 $100 $110

Liberal credit terms for customers is associated with a restrictive short-term financial policy. Question 3 options: True False