1. Discuss the effect of a business combination on cash flow

Solutions

Expert Solution

When one business gains control of a separate business it is known as a business combination. Business combinations are a way for a business to grow externally and expand their business by acquiring a larger share of the market they already operate in or by acquiring a company in a different business altogether to expand their footprint. This is frequently done when a company evaluates themselves and determines that it is either not feasible or not possibleto expand internally. When acquiring another company the two different companies must combine their financial statements. The financial statement is then prepared and recorded by the acquiring company and only the current reporting period is documented.
All business combinations are accounted for using the acquisition method of accounting. The acquirer must be identified as well as the acquisition date. All assets, liabilities, non-controlling interests and goodwill must be measured and recognized by the acquirer. Any acquisition fees will be recognized in the period for which they were incurred with the exception of the cost to issue debt

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Discuss the cash flow statement.

Briefly discuss what are the factors that can affect your cash flow and business profitability? this...

Briefly discuss what are the factors that can affect your cash flow and business profitability? this is cost accounting question i want detailed answer

discuss the nature of a business combination and its various forms? T

From the cash flow statement, discuss the main aspects of the cash flow position of the...

From the cash flow statement, discuss the main aspects of the cash flow position of the company. 28/01/2017 30/01/2016 24/01/2015 th GBP th GBP th GBP 12 months 12 months 12 months Cons. Cons. Cons. Unqualified Unqualified Unqualified IFRS IFRS IFRS Net Cash In(Out)flow Operat. Activ. 850,400 761,300 894,900 Net Cash In(Out)flow Ret. on Invest. -31,400 -30,200 -27,900 Taxation -150,900 -153,000 -152,600 Net Cash Out(In)flow Investing Activ. -154,300 -139,300 -106,000 Capital Expenditure & Financ. Invest. Acquisition & Disposal Equity Dividends...

vi. Discuss the relevant theory (Information content (signalling) hypothesis,Free cash flow hypothesis ,Clientele effect )with the...

vi. Discuss the relevant theory (Information content (signalling) hypothesis,Free cash flow hypothesis ,Clientele effect )with the findings in (iv) and (v). (iv) SFC company Final dividend change 14.00-13.00=1.00 Three days excess return=7.14%-0.84%=6.3% Two days excess return=10.13%-0.40%=9.73% (v) SNL company Final dividend change=3-4.25=-1.25 Three days return excess: -1.21%+1.21%=0 Two days return excess: -1.21%-0=-1.21% OGC company final dividend=1-2=-1 three days return excess= -6.02% -2.39% = -8.41% two days return excess= - -7.47% - 0.19% = -7.66%

1. Calculate the (present) value of an investment in a private business that has cash flow...

1. Calculate the (present) value of an investment in a private business that has cash flow of $50,000 per year, and is expected to earn at least this same amount per year for the “foreseeable future.” Assume your required rate of return, or discount rate is 30.0%. 2. Calculate the value of a BBB rated corporate bond that has a coupon rate of 5.0%, and 10 years to maturity. Current market interest rates for this grade of bond are approximately...

1. describe what cash flow generation is and why it is important for every business to...

1. describe what cash flow generation is and why it is important for every business to focus on cash flow generation first to keep the business afloat. 2. Consider the following scenario: You are the financial manager of a firm that is contemplating investing in a new project that you expect will generate cash flows of $10,000 per year for five years and then $15,000 per year for another two years. At the end of seven years you expect to...

Discuss how debt financing is different from equity financing. How does debt financing effect cash flow,...

Discuss how debt financing is different from equity financing. How does debt financing effect cash flow, taxation expenses, and the balance sheet of a firm?

when the cash balance equal net cash flow for startup business?

For project A, the cash flow effect from the change in net working capital is expected...

For project A, the cash flow effect from the change in net working capital is expected to be 500 dollars at time 2 and the level of net working capital is expected to be 2,600 dollars at time 1. What is the level of current assets for project A expected to be at time 2 if the level of current liabilities for project A is expected to be 1,900 dollars at time 2?

Subjects