cornpary a prune target for a takeover. (Click the icon to view takeover information) Read the isguerments: Te: Krugrion Expons, hici, Board of Drectors Re: How the puchase of treaciry stock will whake if more diffeut for cutsiders to tabe onec the compary Piehasing tront ury =10 tek Oosion invetor gosp. Dsciase in thes cash to buy veasiry anock, tho purchane Requirement 1. Suppose you are a significant stockholder of Krugman Exports, Inc. Write a memorandum to explain to the board how the purchase difficult for Creston to take over Krugman. Explain the effect that purchasing treasury stock would have on stock outstanding and on the size of the To: Krugman Exports, Inc, Board of Directors Re: How the purchase of treasury stock will make it more difficult for outsiders to take over the company Purchasing treasury stock Creston investor group, If Krugman Exports holds a sufficient quantity of company stock in the treas cent) of the outstanding stock from the remaining stockholders: Because it lakes cash to bi decreases the amount of stock outstanding te of the corporation. Reducing the company's cash position may ma Requirement 2. Suppose : increases the amount of authorized shares sales will have on assets, : id later sells the treasury stock at prices greater than the purchase pni increases the amount of stock outstanding Requirement 1. Suppose you are a significant stockhoider of Krugman Exports, Inc. Write a memorandum to explain to the board how the purchar difficult for Creston to take over Krugman. Explain the effect that purchasing treasury stock would have on stock outstanding and on the size of the To: Krugman Exports, Inc., Board of Directors Re: How the purchase of treasury stock will make it more difficult for outsiders to take over the compary Puchasing treasury stock Creston investor group, Because it takes cash tr Requirement 2 Suppos sales will have on asset If Krugman Exports holds a sufficient quantity of company stock in the tre acquire a controlling interest ( 50+ percent) of the outstanding stock from the remaining stockholders. the size of the corporation. Reducing the company's cash position may n hting off the takeover bid and later sells the treasury stock at prices greater than the purchase of income. Requirement 1 . Suppose you are a significant stockholder difficult for Creston to take over Krugman. Explain the effec To: Krugman Exports, Inc, Board of Directors Re: How the purchase of treasury stock will make it more di Purchasing treasury stock Creston irwestor group. acquire a cont Write a memorandum to explain to the board how the purcha stock would have on stock outstanding and on the size of thy decreases has no impact increases over the company Exports holds a sufficient quantity of company stock in the tre it) of the outstanding stock from the remaining stockholders: Because it takes cash to buy treasury stock, the purchase. the size of the corporation. Reducing the company's cash position may i Requirement 2. Suppose Krugman is successful in fighting off the takeover bid and later sells the treasury stock at prices greater than the purchase p sales will have on assets, stockholder's' equity, and net income. Requirement 1. Suppose you are a significant stockholder of Krugman Exports, Inc. Write a memorandum to explain to the board how the purchat difficult for Creston to take over Krugman. Explain the effect that purchasing treasury stock would have on stock outstanding and on the size of th To: Kruaman Exports, Inc, Board of Directors cover the company unattractive to cause the outside investors to abandon their takeover plan Exports holds a sufficient quantity of company stock in the tre it) of the outstanding stock from the remaining stockholders. vuinerable to cause the outside investors to take control of the company If the corporation. Reducing the company's cash position may Requirement 2. Suppose Krugman is successful in fighting off the takeover bid and later sells the treasury stock at prices greater than the purchase ; sales will have on assets, stockholders' equity, and net income. Puchasing trousury ofock Creston investar couip. If Krugman Exports holds a sufticient quantity of compary stock in the troasury, outsidors, such as the Because it tikes cash to buy treasury stock, the purchase swes whi tswe on assels, stockholden' equiry, and net income. Satis dreasury stock at prices above the purchase price company assets bocause of the graser arnount of assets coming in from the sale than went out for buy tho stock. Yreasify stock barsactions. labilfers, so the side of troboury stock atso stockhoiders equity. These sais of thanuy stock net income because the company is dealing with its owners. Transactions beowen the corporation and its ovnone Enat is reported on the encome sticenerk. Purchesing troasury stock If Kropman Exports hoids a sutticient quantly of company stock in the treasury, outsidas, such as the Crestoa inestoc group. acquire a cortroling intecest (50+ porcent) of the outstandro stock from the remaning stockholders. Bocaise it takes cash to boy treasury stock, the purchase the size of the coppostion Rodicing the compary's cash positog may make the conpary siaficientiy sals will beve on assets, stockhoiders' equity, and net incore Salen of treaciry shock at prees above the puichase price compary assets because of the goater amount of assets coming in from the sabe thar went our to biy therock. Tressury stock tarsaction hablities stock also stockholdor's equity: Thenesins of trectury stokk net income E decrease that is reported on the : bemot alfoct: inciease Puchasing troasiny stack. If Krigmas Exports holds a suflicient quanty of compary stock in the veasury, outsidens, such as the Cieston unestor qoup. Because ritabes cash to buy treasury stock, the putchase. the sute of the coppontion flodicing the company's cash position may make the continy sufficiently Pequitoment2. Suppose Kruy sides wil hive on assets, stoc 5ain diressury slock at phet shock Jreasury stock tratsact ncome. ce will not aflect tes, so the sald of trosiry stock asso stockbiders equity. Taceo saites of treatiry atock thet is riportes on the incorre statement. Puchasing trasury stock | 7) It Krugnen Expots holds a sutficient quantify of compary stock in the Heasay, outsiders, such as the Creaton investo grom, Because it takes cach to bar treasury stock, the purchase the size of the copporation. Pedscing the corrpary's cash postion may make the compary sidficiersy istul in figing utf the takeover bid and later sells the treasuy slock a prices grever thas the purchise price. Explain what effect tfese Y. and net incore cannot penetate a protit oraloss behse price labities, so the sile of trosisury stock also stociholders equity can getrerse a profit or a kiss. that is roporiad on the income vistement The investment group Creston is attempting to buy 52% of Krugman's outstanding stock against the wishes of Krugman's board of directors. Board members are convinced that Creston would sell the most desirable pieces of the business and leave little of value. At the most recent board meeting, several suggestions for fighting off the hostile takeover were made. The one with the most promise is to purchase a huge quantity of treasury stock. Krugman has the cash to carry out this plan. treasury stock net income because the company is dealing with its owners. Transactions between that is reported on the income statement. Requirements 1. Suppose you are a significant stockholder of Krugman Exports, Inc. Write a memorandum to explain to the board how the purchase of treasury stock would make it difficult for Creston to take over Krugman. Explain the effect that purchasing treasury stock would have on stock outstanding and on the size of the corporation. 2. Suppose Krugman is successful in fighting off the takeover bid and later sells the treasury stock at prices greater than the purchase price. Explain what effect these sales will have on assets, stockholders' equity, and net income
