Can you check part 1 for my friend? She needs to make some adjustment below: She attached the three files:She needs to include the following in part 1 and throughout part 2 and 3 You will need to expand your analysis. Your score does not indicate everything is correct but reflects your submission. I would suggest adding the following:? Will they expand customers, cannibalize customers, or protect their customer base.? What is the purpose of the merger to gain market share, protect customer basis, or expand into new areas?? Make sure you add scholarly papers that can address such things as? The likelihood of a merger being successful? Elements of successful mergers? The theory behind horizontal or vertical mergers? Support your assertions? Other scholarly topics? You need to address legal challenges to the merger.? You will need to provide references? You will need to address the current ruling on net neutrality and the impact on this business NEXT ? And also merge part 2 and part 3 The two companies I chose to do the creation of merger proposal are Cablevision and Time Warner Cable. In the last fifteen years, I have had the opportunity to utilize both, Cablevision and Time Warner Cable services. This proposal paper illustrates in detail with facts and analysis why it is better for these two companies to merge as one. Cablevision System Corporation Cablevision is an advanced cable television networks company that belongs to the mass media industry and telecommunication and serves in three states including New York, New Jersey, and Connecticut. The company was founded in 1973 by Chairman Charles. The company headquarters located in Bethpage, New York, and it is currently the biggest cable provider in the New York City's metropolitan area and fifth largest throughout the United States (Corporate Information n.d.). The major products which have brought the company revenue are digital cable TV, high-speed Internet, and VoIP (Voice over IP) phone service. The primary services are The optimum television, Optimum Online, News12, Newsday, etc. The company had a net revenue of $6.51 billion during 2015, with a net income of $175 million. Total assets of the company are more than $6.87 billion. It employs more than 15,400 employees. Brief Analysis of Financials for Last Three Years During the last three years, the company's revenue has demonstrated a steady increase. Its revenue increased from $6.23 billion in 2013 to $6.51 billion in 2015. The operating income decreased slightly from $699 million in 2013 to $848 million in 2015. However, the net income was more than $466 million in 2013 as compared to $175 million in 2015, which was a huge drop that year from the last two years. The company's current assets in 2013 were $1.72 billion which increased to $1.88 billion in 2015, and its total assets increased from $6,591 million in 2013 to $6,867 million in 2015. It has the goodwill of more than $262 million and intangible assets of more than $1 million. (Cablevision Systems Corp. n.d.) Cablevision Ratios Analysis Liquity Ratios For the year of 2015, 2014 and 2013, the company had current ratio of 0.86, 1.10 and 1.20 respectively. A current ratio of 2 is considered good. However, we see a significant decline in the current ration from 2013 to 2015, which was also less than the ideal ratio of 2. This indicates that the company will not be able to pay its short term commitments. Acid-test ratio measures the ability of the company to meet its current liabilities only with its quick assets. A quick ratio of 1 is considered good. The ratio of the company has increased during last three years and was more than 1 in 2015. It shows that the company is able to pay its short term liabilities by its quick assets. The Cash ratio is the company's ability to cover its liabilities, it is used to compare the company greatest liquid assets to its current liabilities to determine the company value. A cash ratio below .5 is considered bad. Although there was a decline in cash ratio from 2014 to 2015, the company still in good shape with its cash ratio of 0.68. Profitibility Ratios Profitability ratios measure the profitability of the business in terms of net income as well as in terms of assets. Assets turnover ratio measures the efficiency of the business in using its assets to generate revenue. The asset turnover ratio for 2015 was 96% which shows efficient utilization of the assets of the company. Profit margin ratio measures net income of the business as a percentage of sales. The profit margin ratio of the company in 2014 was 4.82% but it declined to 2.70% in 2015, indicating low margin of profit for the company. Return on sale calculates the operating profit as a percentage of sales. The operating ratio of the company in 2015 was 13.03% which shows that the operating margin of the company is low but has increased in comparison to preceding two years. Stock Performance and Market Value Ratios Earnings per share of the company for the year 2015, 2014 and 2013 was $0.69, $1.15 and $1.79 respectively which other players of the same industry as well as in comparison to industry ratios. The price to earnings ratio or P/E ratio is a prospect ratio and calculates value of stock in relation to earnings by comparing the market price per share. The ratio for the company for the year of 2015 was 51.04 which is highest during the last three years. Time Warner Cable Inc. Time Warner Cable is a leader in global media and media entertainment. It is also an advanced cable television network that serves in 29 states in the United Stated. The company was founded in 1973 as Warner Cable by Steven Ross, and after the merger with ATC in 1992, it was renamed as Time Warner Cable Inc. Like Cablevision, the company's headquarter is located in New York City, and the Chairman and CEO are Robert Marcus. The company is currently the second largest cable company in the United Stated. The primary products which have brought the company revenue are digital cable TV, high-speed Internet, and VoIP (Voice over IP) phone service, and media entertainment. For the year ended December 2015, the company had a revenue of $23.70 billion with a net income was $1.84 billion for the year 2015. Brief Analysis of Financials for Last Three Years During the last three years, the company's revenue has increased a steadily. Its revenue increased from $22.12 billion in 2013 to $23.70 billion in 2015. Despite the steady growth in revenue, the operating income declined from $4.58 billion in 2013 to $4.24 billion in 2015, and the net income also decreased in 2015 and was at $1.84 billion as compared to $1.95 billion in 2013. The company declared a dividend of $3.75 per share in 2015, $3.00 in 2014 and $2.60 in 2013. The company's assets increased from $48.27 billion in 2013 to 49.28 billion in 2015. The company's goodwill was $3.14 billion in 2015, and it had intangible assets of $29.59 billion in 2015. Time Warner Cable Ratios Analysis Liquity Ratios For the year of 2015, 2014 and 2013, the company had current ratio of 0.62, 0.45 and 0.41 respectively. A current ratio of 2 is considered good. Although, the company has improved its current ratio in 2015, but it is also less than ideal ratio of 2. This indicates that the company will not be able to pay its short term commitments. Acid-test ratio measures the ability of the company to meet its current liabilities only with its quick assets. A quick ratio of 1 is considered good. The ratio of the company is too low and indicates the inability of the company to pay its short term obligations using its quick assets. The Cash ratio is the company's ability to cover its liabilities, it is used to compare the company greatest liquid assets to its current liabilities to determine the company value. A cash ratio below .5 is considered bad. Although there an improvement in cash ratio from 2014 to 2015, the company is still in bad shape with its cash ratio of 0.30. Profitibility Ratios Profitability ratios measure the profitability of the business in terms of net income as well as in terms of assets. Assets turnover ratio measures the efficiency of the business in using its assets to generate revenue. The asset turnover ratio for 2015 was 49% which was highest in preceding three years and which shows that the company is not efficiently utilizing its assets in generation of profits. Profit margin ratio measures net income of the business as a percentage of sales. The profit margin ratio of the company in 2014 was 8.90% but it declined to 7.78% in 2015, indicating the ratio for the company is higher than cablevision. Return on sale calculates the operating profit as a percentage of sales. The operating ratio of the company in 2015 was 17.89% which shows that the operating margin of the company is better than cablevision and has also increased in comparison to preceding two years. Stock Performance and Market Value Ratios Earnings per share of the company for the year 2015, 2014 and 2013 was $2.24, $1.88 and $1.80 respectively which shows a decline in comparison to 2013. The earnings per share of the company are higher in comparison to earnings per share of cablevision. The price to earnings ratio or P/E ratio is a prospect ratio and calculates value of stock in relation to earnings by comparing the market price per share. The ratio for the company for the year of 2015 was 28.90 which is highest during the last three years. Here also the ratio is low than cablevision. Corporate Information. (n.d.). Retrieved June 10, 2016, from http://www.cablevision.com/about/leadership/charles_dolan.jsp Chappell, B. (2015, September 15). Cablevision, 5th-Largest U.S. Cable Firm, To Be Sold In $17.7 Billion Deal. Retrieved June 10, 2016, from http://www.npr.org/sections/thetwoway/2015/09/17/441145026/cablevision-5th-largest-u-s-cable-firm-to-be-sold-in-17-7-billiondeal Cablevision Systems Corp. (n.d.). Retrieved June 09, 2016, from http://www.gurufocus.com/term/pettm/NYSE:CVC/PE-Ratiottm/ About Us. (n.d.). Retrieved June 10, 2016, from http://www.timewarner.com/company/about-us Time Warner Cable Inc (TWC) Stock Analysis - GuruFocus.com. (n.d.). Retrieved June 09, 2016, from http://www.gurufocus.com/stock/TWC \fMergers Synergies effects Based on the financial statistics of the two companies; Cable vision and the Time Warner Cable services, senergy effects can clearly be seen. I can perceive synergic effects due to a range of reasons: firstly, both firms are on the same sector, trading on simmilar products, a factor that paves room for potential acquisition. Secondly, taking a look on the financial records of the companies for the last 3 years, there seems to be potential senergy effects in the that effect, both firms generally perform better in their level of operation: Cablevision is the leading firm in provision of cable services in New York while Time Warner Cable services leads globally (Chappell, 2015). The fact that the two forms leads in their level of operation guatantees them a potential to improve after the merger. There exist operating synergies in the two companies' deal that will make them to thrive after merger. When the two companies merge, they will enjoy economies of scale more than before. To start with, they will be acquiring their raw materials in very large quantities that will guarantee them higher quantity discount. Additionally, transport cost will be minimized as the raw materials as well as the finished products will be transported in large volumes thus reducing the transport cost per unit. The overall production charge per unit will be greatly reduced. This All factors held constant, reduction in production cost will amount to higher profits (Brains & Business, n.d). I see a potential of financial synergies also reigning in the deal between the Cablevision and the Time Warner Cable services. Cablevision is relatively challenged in terms of finance in comparison with Time Warner Cable services. Comparing at the statistics of the two companies for the recent 3 years, Time Warner has better financial records by far when compared to Cable vision. For instance, The Time Warner Cable service had higher asset value of $ 49.28 billion in 2015, which was rapid increase from $ 48.27 billion in 2013 compared to Cable vision which had total assets of $ 6.28 billion in the year 2015. This means that Time Warner Cable firm will help Cable vision which is low placed in terms of asset in case of merger. Again, Time Warner registered higher revenue figure of $ 23.70 billion when compared to $ 6.99 billion for Cablevision. Logically, the merger will succeed since higher revenue on the side of The Time Warner Cable, suggests overall good output hence Cablevision will reap from these results (Chappell, 2015). The firms will also be able to achieve pure diversification. In the side of shareholders, diversification at shareholder level will be cost-effective than firm level diversification since acquisition costs are always less. For example, shareholders of Cablevision whose earnings per share are low ($0.69 in 2015) and undergoing decline would find it more convenient to diversify to Time Warner after the mergers. On the side of managers, diversification will help them garner boosted job security and maybe reduced labor expenses. Similarly, diversification would be very beneficial for the firms in retaining their reputation financially. For instance, Time Warner which has poor quick ratio stands to benefit from Cablevision which has a good quick ration of above 1 and can comfortably settle its current liabilities using its quick assets (Brains & Business, n.d). The merger might lure more customers to the companies and also retain the existing customers of the businesses. The confidence and trust of the consumers may be gained due to a number of reasons: to begin with, the fact that the companies will incur relatively lower production cost per unit than before the merger means that the prices of the commodities are highly likely to drop. This will definitely interest clients. Again, operating synergies will make it possible for the firms to hire expatriates hence high chances of quality yields which will stimulate the client loyalty. Potential growth after the merger From the financial analysis and the financial ratios, the firms express high potential growth should they merge. Firstly, the companies will have high asset capacity. While Cablevision had $ 6.28 billion worth of asset in the 2015, Time Warner had $ 49.28 billion value of assets. The combination of both gives $ 55.56 billion which is a huge capital base for operation. This places the mergers at a potential of performing much better than before and realizing high revenues than before since the cost of production per unit will be minimal due to large economies of scale (About Us, n.d.). Looking at the turnover ratios, Cablevision had a turnover ratio of 96 % while Time Warner Cable services had a low 46 % turnover ratio. Turnover ratio shows the ability of a business to utilize its assets to gain revenue. This suggests that Cablevision has the necessary strategies to use assets to maximize revenues thus the mergers will benefit from these skills, utilize the high asset volumes and generate optimal revenue. Logically, the mergers will single out the strengths that either company has had over the other based on the financial ratios of the previous three years and utilize the vast pool of assets they have to achieve maximum revenue and profits. For instance, Cablevision has recently registered a good cash ratio (0.68, which is above 0.5) while Time Warner Cable firm has a extremely poor cash ratio (About Us, n.d.). The merger will utilize the strength of Cablevision by employing the means they employ to achieve this fair cash ratio. In this case, following the merger, the companies will be able to settle their current debts by use of their most liquid assets. This will mean that the companies will reduce strain on less liquid assets, a factor that will; favor the growth of the businesses. On the other hand, Time Warner has an increasing yet better profit margin than Cablevision whose profit margin is not only lower but has also been declining within the past 3 years. In this case, the technique that the management of Time Warner uses will be the most efficacious for the merger. This technique will help the companies to utilize their assets well after the merger to maximize on profits which is always the optimal goal of any enterprise. By and large, after merging, the companies would be able to adopt an effective liquidity ratio stratagem that the mangers of Cablevision use. By so doing, the enterprise will be in a position to settle all of its current liabilities by use of the most quick assets. This would be an authentic indication that the businesses have minimal chances of deploying their permanent assets which amounts to business success (Brains & Business, n.d). Anticipated anti-takeovers from the target Looking at the performance of the stock market, there seem be potential anti-takeover measures on the target firm's side (Cablevision). Firstly, the shares are declining that means the company might be in a plan to adopt Poison Pill. I would advise the bidder to implement the merger immediately before the shares of Cablevision fall further. Secondly, Cablevision might be aiming to apply Staggered Board strategy to reap the benefits of the economies of scale and hinder Time Warner Cable from gaining the control (John, 2016). For this case, I would advise the Time Warner Cable not to sign or approve separate groups of board of directors to run the companies should they merge. Anti-takeovers measures that apply to the companies A few anti-takeovers measure would apply for the two companies: Poison Pill and Staggered Board. Should the Cablevision management require that the board of directors be classified it two groups, an action that will mean that only one group will operate in a year, the bidder (Time Warner will face difficult and take time before controlling Cablevision (John, 2016). In addition, Cablevision might choose to lower the shares further to make the firm appear less profitable thus killing the interests of Time Warner Cable firm. Agency problems that might exist Agency problems might exist from either side since the two firms may not actually be having the parallel objectives. On the side of Cablevision (target), the management might have caused the inefficiencies to lower the stock price of the shares deliberately. The aim might be to allow outsiders to purchase assets at discounts in order to take the assets upwards to complete value (Agency problems, n.d). The agency problem may exist from the fact that it may be opting to utilize the financial flexibility of Cablevision, which has a quick ratio and good current ratio as opposed to its (Time Warner's) poor ratios. The management might be wishing to utilize the flexibility of current assets of Cablevision for their own benefit. References About Us. (n.d.). Retrieved June 10, 2016, from http://www.timewarner.com/company/about-us Agency problems. (n.d). Emerald Group Publishing Limited. Retrieved on July 9, 2016, from http://www.emeraldinsight.com/doi/abs/10.1108/14757700911006958 Brains & Business (n.d), Retrieved on July 9, 2016, from http://www.bain.com/publications/articles/why-some-merging-companies-becomesynergyChappell, B. (2015, September 15). Cablevision, 5th-Largest U.S. Cable Firm, To Be Sold In $17.7 Billion Deal. Retrieved June 10, 2016, from http://www.npr.org/sections/thetwoway/2015/09/17/441145026/cablevision-5th-largest-u-s-cable-firm-to-be-sold-in-17-7billion-deal John, V. (2016, April 14). Defensive Anti-Takeover Board Measures, Retrieved on July 9, 2016, from https://blogs.cfainstitute.org/investor/2016/04/14/defensive-anti-takeover-boardmeasures/ Time Warner Cable Inc (TWC) Stock Analysis - GuruFocus.com. (n.d.). Retrieved June 09, 2016, from http://www.gurufocus.com/stock/TWC . PROPOSAL Through mergers, business entities have grown from small companies to large companies, from national corporations to multinational and international corporations. This is because merger of business entities comes with very many benefits to both the companies which contribute to the success of the entities. When two entities consolidate into one, the pros associated with the merger is always and in most circumstances overweighing the cons related to the merger. Consolidation of assets and liabilities of different businesses under one entity allows the newly formed enterprise to grow and develop. The economies of scale incurred by the new entity formed after a merger is larger compared to the economies of small incurred by individual firms. The large firm reduces the average costs of production through ways such as receiving a larger purchase discount as a result of large bulk buying, receiving a better rate of interest charged of financing instruments taken by the firm, reducing the administrative cost since the administration is merged into one and the labor reduced, better access to technological economies among others. A merged entity enjoys economies of scale which is to the benefit of the two entities. Merging raises the competitive advantage of the two firms. A merged institution has larger resources that it can deploy to create diversification of its products . In the same manner, entity has enough funds and capital to cater for advertisement costs and other costs that may publics it more. Through merger, firms are able to deal with the threat of multinational and even compete on an international scale and in that way the firm enjoys a higher competitive advantage and a larger market share. A merged entity operate s on lower costs and overheads since it is able to share marketing budget, increase its purchasing power and lower the costs of operation. It is also able to access a wider customer base thus increasing its market share compared to when the firms are operating independently. A merger offers an advantage to the two firms by allowing them to gain quick and enough funding and purchase of valuable assets for development. In the presence of overwhelming benefits that firms can derive from merger, a few cons may arise . For instance, a merger may give birth to a monopolistic state of economy where the merged firms control the economy in relation to the goods and services they offer. With the less competition and the larger market share enjoyed by the new entity, the new firm is likely to increasing the price of goods and services for the consumers. Consumers may thus decide to oppose a merger of two firms. The fact that merger will usually lead to unemployment is a challenge that cannot be ignored. This is because, the merged entity, services, departments and organization levels will automatically lead to cutting down on labor since a particular job cannot be performed by excess worker. Due to the layoff, shareholders may decide to oppose the merger. JP Morgan chase bank is a leading global financial firm and one of the largest banking institutions in the United states, with operations worldwide. In 2000, chase bank, a large retail bank, Largely concentrated its operations on lending services. However, this company always desired to acquire a larger market share in whole sale and investment banking operations. For a period of ten years, It looked for a suitable partner to merger with without success. This did not mean that there were no other banks to merge with, but by the fact that every company at the time had a strategy of acquiring a lead position in the banking industry. Still, the two firms could not consider merging because while the clients of JP Morgan were elite high-end clients, those of Chase bank where new starts and largely represented the middle class. After JP Morgan began losing in the credit market, the firm management began considering a merger with Chase bank. After extensive negotiations, JP Morgan considered a merger with Chase bank for $32 billion in stock. The company became JP Morgan chase. One share of JP Morgan common stock was traded for 3.7 share of Chase bank. After a few years, JP Morgan started showing significant improvements. Its stock was up by 40% and the revenue was at its highest point for a three year period. The operating efficiency experienced form the merger amounted to $1.5 billion over a three year period due to the reduction in redundancies in operating costs, real estate etc. The merger saw the JP Morgan Chase company competing internationally since it had enough resources and funds. On April 22, 2004 the article heading \"JP Morgan Chase reports 38% increase in earnings\" appeared in the business section of the New York Times. The article mentioned this statistic in relation to JP Morgan Chase's first quarter earnings. The accomplishment was then credited to the bank's investment banking and market related businesses, which had offset the bank's lower earnings from new refinancing measures and mortgages.. The net income was reported to be $1.9 billion, at this point, compared with $1.4 billion a year earlier. Revenue for the first quarter was reported at $8.98 billion, which was up 7 percent from $8.41 billion a year earlier. All this was credited to the merger effect. Even though most companies succeed after a merger, It is not guaranteed that the merged entity the success of a merger. . It is the right measures and strategies put in place that ensures success of the merger. For instance, 30% of mergers fail within three years of existence due to disparities in organization culture. Employee retention challenges and communication challenges are also among the main factors that affect mergers. It is vital then that the decision makers in a merger take into account these intangible factors that may lead to collapse of the merger. CEOs, executives and managers must develop a culture strategy so as to fully understand the extent to which culture may affect the merger. REFERENCES 1. Cartwright and Schoenberg, R. (2006). Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management, 17(S1), S1-S5. DOI: 10.1111/j.1467-8551.2006.00475. 2. Damodaran, Aswath. "Acquisitions and Takeovers". Transaction Advisors. ISSN 23299134 3. Lamoreaux, Naomi R. "The great merger movement in American business, 1895-1904." Cambridge University Press, 1985. PROPOSAL Through mergers, business entities have grown from small companies to large companies, from national corporations to multinational and international corporations. This is because merger of business entities comes with very many benefits to both the companies which contribute to the success of the entities. When two entities consolidate into one, the pros associated with the merger is always and in most circumstances overweighing the cons related to the merger. Consolidation of assets and liabilities of different businesses under one entity allows the newly formed enterprise to grow and develop. The economies of scale incurred by the new entity formed after a merger is larger compared to the economies of small incurred by individual firms. The large firm reduces the average costs of production through ways such as receiving a larger purchase discount as a result of large bulk buying, receiving a better rate of interest charged of financing instruments taken by the firm, reducing the administrative cost since the administration is merged into one and the labor reduced, better access to technological economies among others. A merged entity enjoys economies of scale which is to the benefit of the two entities. Merging raises the competitive advantage of the two firms. A merged institution has larger resources that it can deploy to create diversification of its products . In the same manner, entity has enough funds and capital to cater for advertisement costs and other costs that may publics it more. Through merger, firms are able to deal with the threat of multinational and even compete on an international scale and in that way the firm enjoys a higher competitive advantage and a larger market share. A merged entity operate s on lower costs and overheads since it is able to share marketing budget, increase its purchasing power and lower the costs of operation. It is also able to access a wider customer base thus increasing its market share compared to when the firms are operating independently. A merger offers an advantage to the two firms by allowing them to gain quick and enough funding and purchase of valuable assets for development. In the presence of overwhelming benefits that firms can derive from merger, a few cons may arise . For instance, a merger may give birth to a monopolistic state of economy where the merged firms control the economy in relation to the goods and services they offer. With the less competition and the larger market share enjoyed by the new entity, the new firm is likely to increasing the price of goods and services for the consumers. Consumers may thus decide to oppose a merger of two firms. The fact that merger will usually lead to unemployment is a challenge that cannot be ignored. This is because, the merged entity, services, departments and organization levels will automatically lead to cutting down on labor since a particular job cannot be performed by excess worker. Due to the layoff, shareholders may decide to oppose the merger. JP Morgan chase bank is a leading global financial firm and one of the largest banking institutions in the United states, with operations worldwide. In 2000, chase bank, a large retail bank, Largely concentrated its operations on lending services. However, this company always desired to acquire a larger market share in whole sale and investment banking operations. For a period of ten years, It looked for a suitable partner to merger with without success. This did not mean that there were no other banks to merge with, but by the fact that every company at the time had a strategy of acquiring a lead position in the banking industry. Still, the two firms could not consider merging because while the clients of JP Morgan were elite high-end clients, those of Chase bank where new starts and largely represented the middle class. After JP Morgan began losing in the credit market, the firm management began considering a merger with Chase bank. After extensive negotiations, JP Morgan considered a merger with Chase bank for $32 billion in stock. The company became JP Morgan chase. One share of JP Morgan common stock was traded for 3.7 share of Chase bank. After a few years, JP Morgan started showing significant improvements. Its stock was up by 40% and the revenue was at its highest point for a three year period. The operating efficiency experienced form the merger amounted to $1.5 billion over a three year period due to the reduction in redundancies in operating costs, real estate etc. The merger saw the JP Morgan Chase company competing internationally since it had enough resources and funds. On April 22, 2004 the article heading \"JP Morgan Chase reports 38% increase in earnings\" appeared in the business section of the New York Times. The article mentioned this statistic in relation to JP Morgan Chase's first quarter earnings. The accomplishment was then credited to the bank's investment banking and market related businesses, which had offset the bank's lower earnings from new refinancing measures and mortgages.. The net income was reported to be $1.9 billion, at this point, compared with $1.4 billion a year earlier. Revenue for the first quarter was reported at $8.98 billion, which was up 7 percent from $8.41 billion a year earlier. All this was credited to the merger effect. Even though most companies succeed after a merger, It is not guaranteed that the merged entity the success of a merger. . It is the right measures and strategies put in place that ensures success of the merger. For instance, 30% of mergers fail within three years of existence due to disparities in organization culture. Employee retention challenges and communication challenges are also among the main factors that affect mergers. It is vital then that the decision makers in a merger take into account these intangible factors that may lead to collapse of the merger. CEOs, executives and managers must develop a culture strategy so as to fully understand the extent to which culture may affect the merger. REFERENCES 1. Cartwright and Schoenberg, R. (2006). Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management, 17(S1), S1-S5. DOI: 10.1111/j.1467-8551.2006.00475. 2. Damodaran, Aswath. "Acquisitions and Takeovers". Transaction Advisors. ISSN 23299134 3. Lamoreaux, Naomi R. "The great merger movement in American business, 1895-1904." Cambridge University Press, 1985. 1 Topic: Mergers and Acquisition Name Institution Course Professor Date Submitted Mergers and Acquisition The two companies I chose to do the creation of merger proposal are Cablevision and Time Warner Cable. In the last fifteen years, I have had the opportunity to utilize both, Cablevision and Time Warner Cable services. This proposal paper illustrates in detail with facts and analysis why it is better for these two companies to merge as one. Cablevision System Corporation Cablevision is an advanced cable television networks company that belongs to the mass media industry and telecommunication and serves in three states including New York, New Jersey, and Connecticut. The company was founded in 1973 by Chairman Charles. The company headquarters located in Bethpage, New York, and it is currently the biggest cable provider in the New York City's metropolitan area and fifth largest throughout the United States (Corporate Information n.d.). The major products which have brought the company revenue are digital cable TV, high-speed Internet, and VoIP (Voice over IP) phone service. The primary services are The optimum television, Optimum Online, News12, Newsday, etc. The company had a net revenue of $6.51 billion during 2015, with a net income of $175 million. Total assets of the company are more than $6.87 billion. It employs more than 15,400 employees. Brief Analysis of Financials for Last Three Years During the last three years, the company's revenue has demonstrated a steady increase. Its revenue increased from $6.23 billion in 2013 to $6.51 billion in 2015. The operating income decreased slightly from $699 million in 2013 to $848 million in 2015. However, the net income was more than $466 million in 2013 as compared to $175 million in 2015, which was a huge drop that year from the last two years. The company's current assets in 2013 were $1.72 billion which increased to $1.88 billion in 2015, and its total assets increased from $6,591 million in Mergers and Acquisition 2013 to $6,867 million in 2015. It has the goodwill of more than $262 million and intangible assets of more than $1 million. (Cablevision Systems Corp. n.d.) Cablevision Ratios Analysis Liquity Ratios For the year of 2015, 2014 and 2013, the company had current ratio of 0.86, 1.10 and 1.20 respectively. A current ratio of 2 is considered good. However, we see a significant decline in the current ration from 2013 to 2015, which was also less than the ideal ratio of 2. This indicates that the company will not be able to pay its short term commitments. Acid-test ratio measures the ability of the company to meet its current liabilities only with its quick assets. A quick ratio of 1 is considered good. The ratio of the company has increased during last three years and was more than 1 in 2015. It shows that the company is able to pay its short term liabilities by its quick assets. The Cash ratio is the company's ability to cover its liabilities, it is used to compare the company greatest liquid assets to its current liabilities to determine the company value. A cash ratio below .5 is considered bad. Although there was a decline in cash ratio from 2014 to 2015, the company still in good shape with its cash ratio of 0.68. Profitibility Ratios Profitability ratios measure the profitability of the business in terms of net income as well as in terms of assets. Assets turnover ratio measures the efficiency of the business in using its assets to generate revenue. The asset turnover ratio for 2015 was 96% which shows efficient utilization of the assets of the company. Mergers and Acquisition Profit margin ratio measures net income of the business as a percentage of sales. The profit margin ratio of the company in 2014 was 4.82% but it declined to 2.70% in 2015, indicating low margin of profit for the company. Return on sale calculates the operating profit as a percentage of sales. The operating ratio of the company in 2015 was 13.03% which shows that the operating margin of the company is low but has increased in comparison to preceding two years. Stock Performance and Market Value Ratios Earnings per share of the company for the year 2015, 2014 and 2013 was $0.69, $1.15 and $1.79 respectively which other players of the same industry as well as in comparison to industry ratios. The price to earnings ratio or P/E ratio is a prospect ratio and calculates value of stock in relation to earnings by comparing the market price per share. The ratio for the company for the year of 2015 was 51.04 which is highest during the last three years. Time Warner Cable Inc. Time Warner Cable is a leader in global media and media entertainment. It is also an advanced cable television network that serves in 29 states in the United Stated. The company was founded in 1973 as Warner Cable by Steven Ross, and after the merger with ATC in 1992, it was renamed as Time Warner Cable Inc. Like Cablevision, the company's headquarter is located in New York City, and the Chairman and CEO are Robert Marcus. The company is currently the second largest cable company in the United Stated. The primary products which have brought the company revenue are digital cable TV, high-speed Internet, and VoIP (Voice over IP) phone Mergers and Acquisition service, and media entertainment. For the year ended December 2015, the company had a revenue of $23.70 billion with a net income was $1.84 billion for the year 2015. Brief Analysis of Financials for Last Three Years During the last three years, the company's revenue has increased a steadily. Its revenue increased from $22.12 billion in 2013 to $23.70 billion in 2015. Despite the steady growth in revenue, the operating income declined from $4.58 billion in 2013 to $4.24 billion in 2015, and the net income also decreased in 2015 and was at $1.84 billion as compared to $1.95 billion in 2013. The company declared a dividend of $3.75 per share in 2015, $3.00 in 2014 and $2.60 in 2013. The company's assets increased from $48.27 billion in 2013 to 49.28 billion in 2015. The company's goodwill was $3.14 billion in 2015, and it had intangible assets of $29.59 billion in 2015. Time Warner Cable Ratios Analysis Liquity Ratios For the year of 2015, 2014 and 2013, the company had current ratio of 0.62, 0.45 and 0.41 respectively. A current ratio of 2 is considered good. Although, the company has improved its current ratio in 2015, but it is also less than ideal ratio of 2. This indicates that the company will not be able to pay its short term commitments. Acid-test ratio measures the ability of the company to meet its current liabilities only with its quick assets. A quick ratio of 1 is considered good. The ratio of the company is too low and indicates the inability of the company to pay its short term obligations using its quick assets. The Cash ratio is the company's ability to cover its liabilities, it is used to compare the company greatest liquid assets to its current liabilities to determine the company value. A cash ratio Mergers and Acquisition below .5 is considered bad. Although there an improvement in cash ratio from 2014 to 2015, the company is still in bad shape with its cash ratio of 0.30. Profitibility Ratios Profitability ratios measure the profitability of the business in terms of net income as well as in terms of assets. Assets turnover ratio measures the efficiency of the business in using its assets to generate revenue. The asset turnover ratio for 2015 was 49% which was highest in preceding three years and which shows that the company is not efficiently utilizing its assets in generation of profits. Profit margin ratio measures net income of the business as a percentage of sales. The profit margin ratio of the company in 2014 was 8.90% but it declined to 7.78% in 2015, indicating the ratio for the company is higher than cablevision. Return on sale calculates the operating profit as a percentage of sales. The operating ratio of the company in 2015 was 17.89% which shows that the operating margin of the company is better than cablevision and has also increased in comparison to preceding two years. Stock Performance and Market Value Ratios Earnings per share of the company for the year 2015, 2014 and 2013 was $2.24, $1.88 and $1.80 respectively which shows a decline in comparison to 2013. The earnings per share of the company are higher in comparison to earnings per share of cablevision. The price to earnings ratio or P/E ratio is a prospect ratio and calculates value of stock in relation to earnings by comparing the market price per share. The ratio for the company for the year of 2015 was 28.90 which is highest during the last three years. Here also the ratio is low than cablevision. Mergers and Acquisition By merging the company will increase in value by gaining more synergies which will be a combination of the value of the two firms. As a result, the combined firm will have more rapid growth due to the increased sales arising from the expansion of the customer base and more market power. The firm will also have the opportunity to access more unique capabilities due to the diversification of the assets and the market in many different places. More so, there will be personal benefits that will accrue to the specific managers due to the expansion. Tax benefits will also be experienced and the firm will have more access to credit due to the presence of more assets that can be used as collateral to get a loan. Finally, the combined firm will be able to achieve to achieve international business goals easily as compared to when they were operating as individual firms Synergies effects Based on the financial statistics of the two companies; Cable vision and the Time Warner Cable services, senergy effects can clearly be seen. I can perceive synergic effects due to a range of reasons: firstly, both firms are on the same sector, trading on simmilar products, a factor that paves room for potential acquisition. Secondly, taking a look on the financial records of the companies for the last 3 years, there seems to be potential senergy effects in the that effect, both firms generally perform better in their level of operation: Cablevision is the leading firm in provision of cable services in New York while Time Warner Cable services leads globally (Chappell, 2015). The fact that the two forms leads in their level of operation guatantees them a potential to improve after the merger. There exist operating synergies in the two companies' deal that will make them to thrive after merger. When the two companies merge, they will enjoy economies of scale more than before. To start with, they will be acquiring their raw materials in very large quantities that will guarantee them higher quantity discount. Additionally, transport cost will be minimized as the Mergers and Acquisition raw materials as well as the finished products will be transported in large volumes thus reducing the transport cost per unit. The overall production charge per unit will be greatly reduced. This All factors held constant, reduction in production cost will amount to higher profits (Brains & Business, n.d). I see a potential of financial synergies also reigning in the deal between the Cablevision and the Time Warner Cable services. Cablevision is relatively challenged in terms of finance in comparison with Time Warner Cable services. Comparing at the statistics of the two companies for the recent 3 years, Time Warner has better financial records by far when compared to Cable vision. For instance, The Time Warner Cable service had higher asset value of $ 49.28 billion in 2015, which was rapid increase from $ 48.27 billion in 2013 compared to Cable vision which had total assets of $ 6.28 billion in the year 2015. This means that Time Warner Cable firm will help Cable vision which is low placed in terms of asset in case of merger. Again, Time Warner registered higher revenue figure of $ 23.70 billion when compared to $ 6.99 billion for Cablevision. Logically, the merger will succeed since higher revenue on the side of The Time Warner Cable, suggests overall good output hence Cablevision will reap from these results (Chappell, 2015). The firms will also be able to achieve pure diversification. In the side of shareholders, diversification at shareholder level will be cost-effective than firm level diversification since acquisition costs are always less. For example, shareholders of Cablevision whose earnings per share are low ($0.69 in 2015) and undergoing decline would find it more convenient to diversify to Time Warner after the mergers. On the side of managers, diversification will help them garner boosted job security and maybe reduced labor expenses. Similarly, diversification would be very beneficial for the firms in retaining their reputation financially. For instance, Time Warner which Mergers and Acquisition has poor quick ratio stands to benefit from Cablevision which has a good quick ration of above 1 and can comfortably settle its current liabilities using its quick assets (Brains & Business, n.d). The merger might lure more customers to the companies and also retain the existing customers of the businesses. The confidence and trust of the consumers may be gained due to a number of reasons: to begin with, the fact that the companies will incur relatively lower production cost per unit than before the merger means that the prices of the commodities are highly likely to drop. This will definitely interest clients. Again, operating synergies will make it possible for the firms to hire expatriates hence high chances of quality yields which will stimulate the client loyalty. Potential growth after the merger From the financial analysis and the financial ratios, the firms express high potential growth should they merge. Firstly, the companies will have high asset capacity. While Cablevision had $ 6.28 billion worth of asset in the 2015, Time Warner had $ 49.28 billion value of assets. The combination of both gives $ 55.56 billion which is a huge capital base for operation. This places the mergers at a potential of performing much better than before and realizing high revenues than before since the cost of production per unit will be minimal due to large economies of scale (About Us, n.d.). Looking at the turnover ratios, Cablevision had a turnover ratio of 96 % while Time Warner Cable services had a low 46 % turnover ratio. Turnover ratio shows the ability of a business to utilize its assets to gain revenue. This suggests that Cablevision has the necessary strategies to use assets to maximize revenues thus the mergers will benefit from these skills, utilize the high asset volumes and generate optimal revenue. Logically, the mergers will single out the strengths that either company has had over the other based on the financial ratios of the previous three years and utilize the vast pool of assets they have to achieve maximum revenue and profits. For instance, Cablevision has recently registered a good cash ratio (0.68, which is above 0.5) while Time Warner Cable firm has a Mergers and Acquisition extremely poor cash ratio (About Us, n.d.). The merger will utilize the strength of Cablevision by employing the means they employ to achieve this fair cash ratio. In this case, following the merger, the companies will be able to settle their current debts by use of their most liquid assets. This will mean that the companies will reduce strain on less liquid assets, a factor that will; favor the growth of the businesses. On the other hand, Time Warner has an increasing yet better profit margin than Cablevision whose profit margin is not only lower but has also been declining within the past 3 years. In this case, the technique that the management of Time Warner uses will be the most efficacious for the merger. This technique will help the companies to utilize their assets well after the merger to maximize on profits which is always the optimal goal of any enterprise. By and large, after merging, the companies would be able to adopt an effective liquidity ratio stratagem that the mangers of Cablevision use. By so doing, the enterprise will be in a position to settle all of its current liabilities by use of the most quick assets. This would be an authentic indication that the businesses have minimal chances of deploying their permanent assets which amounts to business success (Brains & Business, n.d). Anticipated anti-takeovers from the target Looking at the performance of the stock market, there seem be potential anti-takeover measures on the target firm's side (Cablevision). Firstly, the shares are declining that means the company might be in a plan to adopt Poison Pill. I would advise the bidder to implement the merger immediately before the shares of Cablevision fall further. Secondly, Cablevision might be aiming to apply Staggered Board strategy to reap the benefits of the economies of scale and hinder Time Warner Cable from gaining the control (John, 2016). For this case, I would advise the Time Warner Cable not to sign or approve separate groups of board of directors to run the companies should they merge. Anti-takeovers measures that apply to the companies Mergers and Acquisition A few anti-takeovers measure would apply for the two companies: Poison Pill and Staggered Board. Should the Cablevision management require that the board of directors be classified it two groups, an action that will mean that only one group will operate in a year, the bidder (Time Warner will face difficult and take time before controlling Cablevision (John, 2016). In addition, Cablevision might choose to lower the shares further to make the firm appear less profitable thus killing the interests of Time Warner Cable firm. Agency problems that might exist Agency problems might exist from either side since the two firms may not actually be having the parallel objectives. On the side of Cablevision (target), the management might have caused the inefficiencies to lower the stock price of the shares deliberately. The aim might be to allow outsiders to purchase assets at discounts in order to take the assets upwards to complete value (Agency problems, n.d). The agency problem may exist from the fact that it may be opting to utilize the financial flexibility of Cablevision, which has a quick ratio and good current ratio as opposed to its (Time Warner's) poor ratios. The management might be wishing to utilize the flexibility of current assets of Cablevision for their own benefit. Mergers and Acquisition Successful mergers usually have some certain common elements. Recessions usually change businesses thus forcing them to cut down the costs, change their philosophies, or even change alter their structures so as to remain afloat. Often this basically means acquiring, cooperating or even merging with other companies so as to remain viable and competitive. All the business associations face the same problems like pressures of fluctuations in revenue, changing of the consumer needs, fast growing consumer demands, and also high evolving technology. All these factors usually force them to consider alternatives like merging for better serving of their customers and thus survival Merging can be of different types and there are several ways in which companies can combine their structures and the core competencies so as to increase their effectiveness. We have the two common types of mergers which include the vertical and horizontal merger. Both the horizontal and the vertical mergers are the two main options to make internal investments that may help your company achieve its objectives within a very short period of time and at a very low cost A horizontal merger usually takes place when two firms that are offering similar products or may be services to the same common market combine under one single ownership. If one of the other companies sell its products similar to yours, the combined sales will always give a greater share in the market. In case the other company produces products complementary to the one your company offers, there becomes an option of offering a wider range of diversified products to the customers hence more sales and can even venture new markets. Basically, the Mergers and Acquisition main reason behind any horizontal merger is usually to increase the total revenue and this is achieved by offering an extra range of products to the existing customers and markets On the other hand, a vertical merger is not made to increase the revenues, but to improve efficiency of operations and usually takes place when two firms that previously used to sell or buy form each other combine to form one business entity. The companies can be at different levels of production. Vertical mergers make your firm gain more secure access to the most important supplies. They also aid to cut or reduce the overall costs by eliminating the high costs of looking for suppliers, negotiating for the deals and even paying full market prices competitors. We have some legal challenges that mergers face. One of the essential reasons that mergers fail before they can ever be finished is because of the contrasts between those endeavoring the merger in any case. Contrasts in sentiment or administration style may bring about potential accomplices to neglect to see eye-to-eye, making the merger transactions separate. This can happen for different reasons also. Contrasts in identity may bring about two potential accomplices to go separate ways despite the fact that it might be commonly helpful to join their endeavors. Legitimate issues show another significant mess the organizations may keep running into amid the merger procedure. Since the section of the Sherman Anti-trust Act of 1890, organizations in the United States have been illegal to frame any sort of business element that may bring about the confinement of reasonable exchange. This applies to mergers at the corporate level also. The demonstration shows that any "mixes" in restriction of exchange are likewise unlawful. It has taken well over a century for U.S. policymakers to completely define Mergers and Acquisition what this implies, yet it is a vital thought that organizations must make when advancing in the merger procedure. Mergers and Acquisition References Bruner, R. F. (2011). Applied Mergers and Acquisitions Workbook. Hoboken: John Wiley & Sons Stahl, G. K., & Mendenhall, M. E. (2005). Mergers and acquisitions: Managing culture and human resources. Stanford, Calif: Stanford Business Books. Corporate Information. (n.d.). Retrieved June 10, 2016, from http://www.cablevision.com/about/leadership/charles_dolan.jsp Chappell, B. (2015, September 15). Cablevision, 5th-Largest U.S. Cable Firm, To Be Sold In $17.7 Billion Deal. Retrieved June 10, 2016, from http://www.npr.org/sections/thetwoway/2015/09/17/441145026/cablevision-5th-largest-u-s-cable-firm-to-be-sold-in-17-7-billiondeal Cablevision Systems Corp. (n.d.). Retrieved June 09, 2016, from http://www.gurufocus.com/term/pettm/NYSE:CVC/PE-Ratiottm/ About Us. (n.d.). Retrieved June 10, 2016, from http://www.timewarner.com/company/about-us Time Warner Cable Inc (TWC) Stock Analysis - GuruFocus.com. (n.d.). Retrieved June 09, 2016, from http://www.gurufocus.com/stock/TWC PROPOSAL Through mergers, business entities have grown from small companies to large companies, from national corporations to multinational and international corporations. This is because merger of business entities comes with very many benefits to both the companies which contribute to the success of the entities. When two entities consolidate into one, the pros associated with the merger is always and in most circumstances overweighing the cons related to the merger. Consolidation of assets and liabilities of different businesses under one entity allows the newly formed enterprise to grow and develop. The economies of scale incurred by the new entity formed after a merger is larger compared to the economies of small incurred by individual firms. The large firm reduces the average costs of production through ways such as receiving a larger purchase discount as a result of large bulk buying, receiving a better rate of interest charged of financing instruments taken by the firm, reducing the administrative cost since the administration is merged into one and the labor reduced, better access to technological economies among others. A merged entity enjoys economies of scale which is to the benefit of the two entities. Merging raises the competitive advantage of the two firms. A merged institution has larger resources that it can deploy to create diversification of its products . In the same manner, entity has enough funds and capital to cater for advertisement costs and other costs that may publics it more. Through merger, firms are able to deal with the threat of multinational and even compete on an international scale and in that way the firm enjoys a higher competitive advantage and a larger market share. A merged entity operate s on lower costs and overheads since it is able to share marketing budget, increase its purchasing power and lower the costs of operation. It is also able to access a wider customer base thus increasing its market share compared to when the firms are operating independently. A merger offers an advantage to the two firms by allowing them to gain quick and enough funding and purchase of valuable assets for development. In the presence of overwhelming benefits that firms can derive from merger, a few cons may arise . For instance, a merger may give birth to a monopolistic state of economy where the merged firms control the economy in relation to the goods and services they offer. With the less competition and the larger market share enjoyed by the new entity, the new firm is likely to increasing the price of goods and services for the consumers. Consumers may thus decide to oppose a merger of two firms. The fact that merger will usually lead to unemployment is a challenge that cannot be ignored. This is because, the merged entity, services, departments and organization levels will automatically lead to cutting down on labor since a particular job cannot be performed by excess worker. Due to the layoff, shareholders may decide to oppose the merger. JP Morgan chase bank is a leading global financial firm and one of the largest banking institutions in the United states, with operations worldwide. In 2000, chase bank, a large retail bank, Largely concentrated its operations on lending services. However, this company always desired to acquire a larger market share in whole sale and investment banking operations. For a period of ten years, It looked for a suitable partner to merger with without success. This did not mean that there were no other banks to merge with, but by the fact that every company at the time had a strategy of acquiring a lead position in the banking industry. Still, the two firms could not consider merging because while the clients of JP Morgan were elite high-end clients, those of Chase bank where new starts and largely represented the middle class. After JP Morgan began losing in the credit market, the firm management began considering a merger with Chase bank. After extensive negotiations, JP Morgan considered a merger with Chase bank for $32 billion in stock. The company became JP Morgan chase. One share of JP Morgan common stock was traded for 3.7 share of Chase bank. After a few years, JP Morgan started showing significant improvements. Its stock was up by 40% and the revenue was at its highest point for a three year period. The operating efficiency experienced form the merger amounted to $1.5 billion over a three year period due to the reduction in redundancies in operating costs, real estate etc. The merger saw the JP Morgan Chase company competing internationally since it had enough resources and funds. On April 22, 2004 the article heading \"JP Morgan Chase reports 38% increase in earnings\" appeared in the business section of the New York Times. The article mentioned this statistic in relation to JP Morgan Chase's first quarter earnings. The accomplishment was then credited to the bank's investment banking and market related businesses, which had offset the bank's lower earnings from new refinancing measures and mortgages.. The net income was reported to be $1.9 billion, at this point, compared with $1.4 billion a year earlier. Revenue for the first quarter was reported at $8.98 billion, which was up 7 percent from $8.41 billion a year earlier. All this was credited to the merger effect. Even though most companies succeed after a merger, It is not guaranteed that the merged entity the success of a merger. . It is the right measures and strategies put in place that ensures success of the merger. For instance, 30% of mergers fail within three years of existence due to disparities in organization culture. Employee retention challenges and communication challenges are also among the main factors that affect mergers. It is vital then that the decision makers in a merger take into account these intangible factors that may lead to collapse of the merger. CEOs, executives and managers must develop a culture strategy so as to fully understand the extent to which culture may affect the merger. REFERENCES 1. Cartwright and Schoenberg, R. (2006). Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management, 17(S1), S1-S5. DOI: 10.1111/j.1467-8551.2006.00475. 2. Damodaran, Aswath. "Acquisitions and Takeovers". Transaction Advisors. ISSN 23299134 3. Lamoreaux, Naomi R. "The great merger movement in American business, 1895-1904." Cambridge University Press, 1985. 1 Topic: Mergers and Acquisition Name Institution Course Professor Date Submitted Mergers and Acquisition The two companies I chose to do the creation of merger proposal are Cablevision and Time Warner Cable. In the last fifteen years, I have had the opportunity to utilize both, Cablevision and Time Warner Cable services. This proposal paper illustrates in detail with facts and analysis why it is better for these two companies to merge as one. Cablevision System Corporation Cablevision is an advanced cable television networks company that belongs to the mass media industry and telecommunication and serves in three states including New York, New Jersey, and Connecticut. The company was founded in 1973 by Chairman Charles. The company headquarters located in Bethpage, New York, and it is currently the biggest cable provider in the New York City's metropolitan area and fifth largest throughout the United States (Corporate Information n.d.). The major products which have brought the company revenue are digital cable TV, high-speed Internet, and VoIP (Voice over IP) phone service. The primary services are The optimum television, Optimum Online, News12, Newsday, etc. The company had a net revenue of $6.51 billion during 2015, with a net income of $175 million. Total assets of the company are more than $6.87 billion. It employs more than 15,400 employees. Brief Analysis of Financials for Last Three Years During the last three years, the company's revenue has demonstrated a steady increase. Its revenue increased from $6.23 billion in 2013 to $6.51 billion in 2015. The operating income decreased slightly from $699 million in 2013 to $848 million in 2015. However, the net income was more than $466 million in 2013 as compared to $175 million in 2015, which was a huge drop that year from the last two years. The company's current assets in 2013 were $1.72 billion which increased to $1.88 billion in 2015, and its total assets increased from $6,591 million in Mergers and Acquisition 2013 to $6,867 million in 2015. It has the goodwill of more than $262 million and intangible assets of more than $1 million. (Cablevision Systems Corp. n.d.) Cablevision Ratios Analysis Liquity Ratios For the year of 2015, 2014 and 2013, the company had current ratio of 0.86, 1.10 and 1.20 respectively. A current ratio of 2 is considered g