Question
Accounting Data Alpha Company Beta Company Sales $50 million $5 million Net income $4 million $374,000 Common shares outstanding 500,000 100,000 Earnings per share $8.00
| Accounting Data | Alpha Company | Beta Company |
| Sales | $50 million | $5 million |
| Net income | $4 million | $374,000 |
| Common shares outstanding | 500,000 | 100,000 |
| Earnings per share | $8.00 | $4.00 |
| Dividends per share | $3.00 | $1.00 |
| Common stock market price | $65 | $25 |
| Price/earnings ratio | 8 | 6 |
4.. (a) Calculate the exchange ratio if Alpha offers the Beta stockholders a 25% premium over Twinsburgs current market price.
ANS:___________
4 (b) Calculate the post-merger earnings per share if the exchange ratio is 0.5 shares of Essex for each share of Twinsburg. (Assume total post-merger earnings are $4,000,000)
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Management Accounting
Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen
6th Edition
9780077185534
