Assume the Knight Corporation is considering the acquisition of Day Inc. The expected earnings per share for the Knight Corporation will be $3 with or without the merger. However, the standard deviation of the earnings will go from $2.55 to $1.95 with the merger because the two firms are negatively correlated. a. Compute the coefficient of variation for the Knight Corporation before and after the merger. (Do not round intermediate calculations and round your answers to 2 decimal places.) Pre-merger Post-merger Coefficient of Variation
Q: Allison Corporation acquired 90 percent of Bretton on January 1, 2019. Of Bretton's total…
A: Consolidation is the process of combination of the financial position of the various subsidiaries…
Q: A manufacturer reports the following for two of its divisions for a recent month. Average assets…
A: Return On Investment : Return On Investment can be calculated by dividing net operating income by…
Q: Exercise 13-36 (Static) Estimate Purchases and Cash Disbursements (LO 13-3, 4) Ellot Sprinkler…
A: 16,80014,70015,540Purchase BudgetAugustSeptemberOctoberUnits required15,00014,70015,540Plus: Desired…
Q: Units produced Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing…
A: ABSORPTION COSTINGAbsorption Costing is a Cost managerial Accounting method in which All Cost…
Q: What is the arm's length principle and how does it relate to transfer pricing?
A: Transfer pricing is the process of figuring out the costs associated with the acquisition, sale, or…
Q: Use the adjusted trial balance and prepare a properly formatted multi-step income statement…
A: The income statement is one of the financial statements of the business. It tells about the…
Q: Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching…
A: Divisional Transfer priceThe divisional Transfer price is the transfer price for which goods or…
Q: Question 4: The following details regarding Machines are provided: Machine Date of purchase Cost…
A: Depreciation is the reduction in the value of asset due tonormal wear and tearEffluxion of…
Q: Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is…
A: Variable overheadsVariable overheads are the overheads that are variable in nature i.e. these are…
Q: TRUE OR FALSE 1.A worksheet is a mandatory form that must be prepared along with an income…
A: Since you have posted multiple questions, we will do the first three for you. Please post the other…
Q: Douglass Minerals mines ore and then processes it into other products. At the end of the mining…
A: Joint costs refer to the cost of manufacturing incurred in the production of more than one product…
Q: Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores.…
A: The net income is calculated as the difference between the revenue and expenses. The customer margin…
Q: 5 Long-term notes payable. Owner, Capital Owner, Withdrawals Services revenue Wages expense…
A: The income statement is one of the important financial statements of the business. It records the…
Q: During the current year, Brewer Company acquired all of the outstanding common stock of Miller…
A: Journal Entry is the primary step to record the transaction in the books of accounts.The increase in…
Q: Prepare a Statement of Cash Flows based on the below transactions for Karens Designs. Please don't…
A: Statement of cash flows is one of the financial statement being prepared in business. It shows all…
Q: Computing Federal Income Tax Using the table (Refer to Figure 8-4 in the text.), determine the…
A: Withholding amount is the amount of tax hold from the part of the income. The amount is calculated…
Q: 1 200334 During Heaton Company's first two years of operations, it reported absorption costing net…
A: ABSORPTION COSTINGAbsorption Costing is a Cost managerialAccounting method in which All Cost related…
Q: Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to…
A: Investment in Associates and Joint venture and SubsidiaryEquity Accounting method - This method is…
Q: Lucas Co. has a job-order costing system. For the month of April, the following debits (credits)…
A: Job costing is a system of allocating costs to groups of unique product. It is applicable to the…
Q: Orange Inc. offers a discount on an extended warranty on its oPhone when the warranty is purchased…
A: Some companies also offer warranty for the product it sells to customers. The company offers a…
Q: during the current year. Quail paid dividends of $25,000 to its shareholders during the year. How…
A: Dividend is return to shareholders for their investments. It is paid by a company to its…
Q: The outstanding share capital of Sheng Inc. includes 52,000 shares of $9.60 cumulative preferred and…
A: The dividend is declared to the shareholders from the retained earnings of the business. The…
Q: Match the correct word to the definition or phrase. 1. 2. 3. [Select] [Select] Amortization…
A: DEPRECIATION EXPENSEDepreciation means gradual decrease in the value of an asset due to normal wear…
Q: Shamrock Inc uses a perpetual inventory system. Date for product E2 D2 includes the following…
A: Weighted Average Method :— It is one of the method of inventory valuation in which it is assumed…
Q: The Coby Company expects sales in 2021 of 201,000 units of serving trays. Coby's beginning inventory…
A: The production budget is prepared at the starting of the period to know the estimated needs of…
Q: Mary Jarvi a single
A: As per Internal Revenue Service federal tax liability means how much amount of…
Q: A table for a monthly bank reconciliation dated September 30 is given below. For each item 1 through…
A: A bank reconciliation statement compares the bank's account balance with internal financial records…
Q: Postings from the purchases journal to the subsidiary ledger are generally made: a. yearly b.…
A: Purchase journal is that journal which helps in recording all purchases made on credit by the…
Q: Use the adjusted trial balance and prepare a properly formatted Statement of Retained Earning…
A: STATEMENT OF SHAREHOLDERS EQUITYStatement of Shareholders Equity is also Known as Changes in…
Q: E9-17 (Algo) (Supplement 9A) Calculating and Reporting Depletion [LO 9-S1] Salamander Company (SC)…
A: The depletion method is followed by companies that have assets like natural resources like oil, gas,…
Q: Suggest at least two advantages and two disadvantages of international taxation.
A: International taxation refers to the set of laws, regulations, and practices that govern the…
Q: Crane Corporation sells a single product for $40. Its management estimates the following revenues…
A: Break even point is the point of sale where there is no profit no loss situation. Means at this…
Q: N Data Account Te Debit Journalize the following transactions for Cox Company using the gross method…
A: Journal Entry :— It is an act of recording transaction in books of account when transaction…
Q: The following information is relevant(ADJUSTMENT): 1)The fair value of Danute’s net assets differed…
A: The difference between the purchase price paid for an acquired company and the fair value of its…
Q: Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its…
A: The variance is the difference between the standard and actual production data. The variance can be…
Q: Required: Prepare Shadee's budgeted income statement for the months of May and June,
A: Budgeting is the process of estimating future values by using past performance. which helps the…
Q: The income statement for the year 2020 of Tango Co. contains the following information: Revenues…
A: The closing entries are prepared to close the temporary accounts of the business. The temporary…
Q: Accounting is sometimes characterized as dealing only with the past. Give examples of how accounting…
A: Accounting can be defined as the systematic process of recording, classifying, summarizing,…
Q: Which of the following may not inherit from a decedent's estate? An heir convicted of murdering the…
A: Inheritance from a decedent's estate refers to the transfer of assets, property, and other financial…
Q: Eastport Incorporated was organized on June 5, Year 1. It was authorized to issue 370,000 shares of…
A: Issue of stock is one of the important source of finance being used in business. It can be common…
Q: Granny's Fried Chicken bought equipment on January 2, 2024, for $21.000 The equipment was expected…
A: Depreciation Expenses is an expense incurred on the fixed assets of the company. Depreciation is…
Q: At the beginning of May, 4,000 units were in beginning inventory that were 100% complete as to…
A: Equivalent units is number of units completed or manufactured in the particular period. By weighted…
Q: Karasuma and Irina are partners who have capitals of P6,000 and P4,800 and who share profits in the…
A: As per the given information:Partner's having capital Karasuma - P6000Irina - P4800Partnership…
Q: Prepare journal entries for the following: a) Requisitioned into production $50,000 direct material…
A: The overhead is applied to the production on the basis of pre-determined overhead rate. The overhead…
Q: Grouper Book Warehouse Ltd. distributes hardcover books to retail stores. At the end of May.…
A: Journal entry is an important tool in any organization whether its big organization or small because…
Q: Sheridan Company maintains a petty cash fund for small expenditures. These transactions occurred…
A: The journal entries are prepared to record the transactions on regular basis. The petty cash fund is…
Q: Cool Sky reports the following for its first year of operations. The company produced 44,000 units…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: Smith and Walton's process-based shop is undergoing major changes and have asked you to come in an…
A: Ending inventory can be determined with the information of beginning inventory and cost incurred…
Q: Mary has saved enough money to make a $10,000 down payment on a $3 finance the purchase with an auto…
A: Monthly payment refers to an amount that is paid at every month for the repayment of loan amount…
Q: Cobblers LA 12 Calculate the lower of cost or market (LCM) value for each individual item. Apply LCM…
A: Inventory is one of the important current asset being used in business. LCM method of valuation of…
Step by step
Solved in 3 steps with 2 images
- ← After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios: EJH Enterprises has EPS of $2.00, EBITDA of $300 million, $27 million in cash, $42 million in debt, and 104 million shares outstanding. What range of prices is consistent with both sets of multiples? + The range of prices will be: Lowest price within both ranges, the P/E and EV/EBITDA ranges, is $. (Round to two decimal places.) Highest price within both ranges, the P/E and the EV/EBITDA ranges, is $. (Round to two decimal places.)After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios EJH Enterprises has EPS of $1.80, EBITDA of $290 million, $30 million in cash, $40 million in debt, and 102 million shares outstanding. What range of prices is consistent with both sets of multiples? The lowest price within both ranges, the P/E and the EV/EBITDA ranges, is S (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Comp 2 Comp 31 11 12.5 18 20 EV/EBITDA P/E Comp 1 12 19 Print Done Comp 4 10 17 - XAs a merger arbitrageur you are considering an investment in two target companies of a merger, A and B. The deal spread for A is 16 % and for B the deal spread is 8 %. Which of the following statements is correct? O A. If both deals fail, then A will have a more negative return than B. O B. If both deals fail, then B will have more negative return than A.
- Erna Corporation is evaluating an extra dividend versus a share repurchase. In either case, $19,000 would be spent. Current earnings are $1.60 per share and the stock currently sells for $50 per share. There are 2,500 shares outstanding. Ignore taxes and other imperfections. a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What will be the effect on the company’s EPS and PE ratio under the two different scenarios? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Give typing answer with explanation and conclusionYour company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $41. You are thinking of buying TargetCo, which has earnings of $1 per share, 1 million shares outstanding, and a price per share of $27. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 23% premium to buy TargetCo. However, the actual premium that your company will pay for TargetCo when it completes the transaction will not be 23%, because on the announcement the target price will go up and your price will go down to reflect the fact that you are willing to pay a premium for TargetCo without any synergies. Assume that the takeover will occur with certainty and all market participants know this on the announcement of the takeover (ignore time value of money). a. What is the price per share of the…Erna Corporation is evaluating an extra dividend versus a share repurchase. In either case, $53,500 would be spent. Current earnings are $1.79 per share, and the stock currently sells for $64 per share. There are 9,000 shares outstanding. Ignore taxes and other imperfections. a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What will the company's EPS and PE ratio be under the two different scenarios? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a. Extra dividend Price per share Shareholder wealth a. Repurchase Price per share Shareholder wealth b. Extra dividend EPS PE ratio b. Repurchase EPS PE ratio
- Wonda Inc aims to acquire Ovaltime Ltd in the near future. As an analyst, you have compiled the data as follows:As per the table is shown above, calculate the following:a) of shares to be issued by the acquirerb) Post-merger EPSc) Post-merger P/E if market is efficientd) Post-merger P/E if market is not efficiente) One-day after the M&A process, the new company stock price becomes Rm 10, with 3-month T-bills 5%, bursa Malaysia return was 12% with risk premia of 0.8. Is there any abnormal return from the M&A Process? Prove it.After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios: . EJH Enterprises has EPS of $1.90, EBITDA of $295 million, $30 million in cash, $44 million in debt, and 105 million shares outstanding. What range of prices is consistent with both sets of multiples? The range of prices will be: Lowest price within both ranges, the P/E and EV/EBITDA ranges, is $ Highest price within both ranges, the P/E and the EV/EBITDA ranges, is $ Data table EV/EBITDA (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) Comp 2 Comp 3 Comp 1 12 11 12.5 19 18 20 P/E (Round to two decimal places.) Print Done Comp 4 10 17 XAs a merger arbitrageur you are considering an investment in two target companies of a merger, A and B. The deal spread for A is 16 % and for B the deal spread is 8 %. Which of the following statements is correct? O A. The probability of deal failure is higher for A than for B. O B. The probability of deal failure is higher for B than for A.
- After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios: . EJH Enterprises has EPS of $1.90, EBITDA of $300 million, $30 million in cash, $40 million in debt, and 102 million shares outstanding. What range of prices is consistent with both sets of multiples? The range of prices will be: Lowest price within both ranges, the P/E and EV/EBITDA ranges, is $ (Round to two decimal places.) Highest price within both ranges, the P/E and the EV/EBITDA ranges, is $ (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) EV/EBITDA P/E Comp 1 12 Comp 2 11 Comp 3 12.5 19 18 20 Comp 4 10 17 Print Done -Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 6,400 1,600 Price per share $ 48 $ 19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,900. a. If Firm T is willing to be acquired for $21 per share in cash, what is the NPV of the merger? b. What will the price per share of the merged firm be assuming the conditions in (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If Firm T is willing to be acquired for $21 per share in cash, what is the merger premium? d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T's shares, what will the price per share of the merged firm be? (Do not round intermediate calculations and round your answer to 2…The Taylor Company has an ROA of 9.1 percent, a profit margin of 10.5 percent, and an ROE of 16.5 percent. What is the company's total asset turnover? Do not round intermediate calculations and round your answer to 2 decimal places, e.g 32.16. What is the equity multiplier? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.