The shares of Amalgamator and Consolidator are both trading at multiples of 2.5 times book...
60.1K
Verified Solution
Link Copied!
Question
Accounting
The shares of Amalgamator and Consolidator are both trading at multiples of 2.5 times book value per share. Shareholders’ equity is $200 million at Amalgamator and $60 million at Consolidator. Amalgamator uses stock held in its treasury to acquire consolidator for $263 million. Prior to the acquisition, Amalgamator’s ratio of total assets to total liabilities is 1.25 times, while the comparable figure for Consolidator is 1.18 times.
QUESTIONS:
1.) By paying a premium to Consolidator’s tangible asset value, how much goodwill does Amalgamator create (in millions of dollars)?
2.) What is the total-assets-to-total-liabilities ratio of the combined company?
3.) What's the ratio of tangible assets to total liabilities of the combined company?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
