Effect of Investing on Ratios
DeFond Company wishes to secure a reliable supply of a key
component for its production processes, and its management is
considering two alternative investments. Verduzco Company produces
exactly the supply that DeFond needs, so DeFond could use cash to
purchase 100% of the common stock of Verduzco. Lin Company produces
twice as much of the component that DeFond needs, but DeFond could
form a joint venture with another company where each would purchase
50% of...