Exam 27: Corporate Restructuring

The accounting method used in most mergers is the ____ method.

A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists is known as a ____.

Quarter Staff is being liquidated under Chapter 7 of the bankruptcy code. When it filed for bankruptcy, its balance sheet (in millions) was as follows: Assets Liabilities \& Capital Current assets \ 14.9 Accounts payable \ 4.6 Land \& buildings 10 Accrued wages 0.1 Equipment 6 Accrued taxes 0.4 Total assets \ 30.9 Notes payable 5.0 Mortgage bonds 5.2 Stockholders' equity 15.6 Total liabilities \& equity \ 30.9 ? The notes payable are an unsecured bank loan, and the mortgage bond is secured by the land and building. The proceeds from the liquidation of the company's assets are as follows: Current assets \ 7.2 Land \& buil ding 4.5 Equipment 2.1 Total \ 13.8 ? If the bankruptcy administration charges were $500,000, what dollar amount will the trade creditors (accounts payable) receive in the liquidation?

An anti-takeover measure that is inserted in the corporate charter stating that 80% of the stock shares must approve the takeover proposal is a(n) ____.

Essex Industries is considering the acquisition of Twinsburg Company in a stock-for-stock exchange. The following financial data are available on both companies. (Assume no synergy is expected with this merger.) Calculate answers to nearest 0.001.? ? Essex Twinsburg Sales \ 500 million \ 50 million Net income \ 40 million \ 3.74 million Common shares outstanding 5 million 1 million Earnings per share \ 8.00 \ 3.74 Dividends per share \ 3.00 \ 1.00 Common stock market price \ 64 \ 24 Pricelearnings ratio 8 6.42 ? Calculate the exchange ratio if Essex offers the Twinsburg stockholders a 20% premium over Twinsburg's current market price.

The ____ is the number of acquiring company shares received per share of acquiring company stock owned.

One anti-takeover measure is the ____, where the target company makes a takeover bid for the stock of the bidder.

The major methods typically used to value merger candidates include all except which of the following?

Legal bankruptcy proceedings focus on the decision of whether the firm's value as a going concern is greater than its ____ value.

In the ____ method of accounting for mergers, the total value paid or exchanged for the acquired firm's assets is recorded on the acquiring company's books.

In the ____ method for combining financial accounts in a merger, the total value paid or exchanged for the acquired company's assets is recorded on the acquiring company's books.

____ equals the capitalized value of the company's operating earnings minus its liabilities.