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CTP · Question #368
CTP Question #368: Real Exam Question with Answer & Explanation
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Question
- (Topic 4) XYZ Company has decided to purchase a close competitor. This acquisition would make XYZ Company the 4th largest in its industry allowing it better purchasing power and greater distribution channels. After completing the M&A analysis, it is determined that the combined companies would produce a 40% increase in revenue, reduce manufacturing costs by 30%, but would increase current liabilities by 27%. Which of the following would keep the acquisition from happening?
Options
- AIncreased weighted average cost of capital
- BLow return on investment
- CNegative net present value
- DRestrictive bond covenants
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