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Disk Ltd is planning to acquire its competitor, Netfixy for $15,000,000 as it believes that the demand for online movies will increase exponentially in
Disk Ltd is planning to acquire its competitor, Netfixy for $15,000,000 as it believes that the demand for online movies will increase exponentially in the next 20 years. Financial data for the "before-acquisition" and "after-acquisition" are as the following: Total current assets Total non-current assets Total current liabilities Total non-current liabilities Revenue from ordinary activities Operating expenses Net Profit Margin Before Acquisition Return on Asset Before Acquisition Required: Calculate the following ratios Before and After the acquisition. Current Ratio Before Acquisition Before Acquisition ($) After acquisition ($) 3,000,000 5,000,000 7,300,000 10,000,000 1,500,000 3,500,000 4,000,000 9,000,000 Debt to Equity Before Acquisition 1,000,000 600,000 Net Profit Margin After Acquisition Return on Asset After Acquisition Current Ratio After Acquisition 1,300,000 700,000 Debt to Equity After Acquisition (4 marks) b) Based on the above ratios, explain whether Disk Ltd should invest in Netfixy Ltd. (2 marks)
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