Krugman Exports, Inc., is located in Clancy, New Mexico. The company does business with specially stores such as Neiman Marcus.Krugman's recent success has made the company a prime target for a takeover. (Click the icon to view takeover Information.) Read the requirements Requirement 1. Suppose you are a significant stockholder of Krugman Exporls, 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. 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 y. If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, acquire a controlling Interest (50+ percent) 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 cast position may make the company sufficiently Requirement 2. Suppose Krugman 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. Sales of treasury stock at prices above the purchase price company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so the sale of treasury stock also stockholders' equity These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners V that is reported on the income statement. i More Info 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 investors would sell the most desirable pieces of the business and leave little of value. Click to select your answer(s). At the most recent board meeting, several suggestions 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. ? Requirement 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. 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 If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, acquire a controlling Purchasing treasury stock interest (50+ percent) of the Because it takes cash to bu decreases the amount of stock outstanding size of the corporation. Reducing the company's cash position may make the company sufficiently increases the amount of authorized shares increases the amount of stock outstanding Requirement 2. Suppose I 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. company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so Sales of treasury stock at prices above the purchase price the sale of treasury stock also stockholders' equity. These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently may be able to may not be able to Requirement 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. company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so Sales of treasury stock at prices above the purchase price the sale of treasury stock also stockholders' equity. These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently decreases Requirement 2. Suppose Krugman is successful in fighting d 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. has no impact Sales of treasury stock at prices above the purchase price y assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so increases the sale of treasury stock also stockholde. -1- These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently I 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. unattractive to cause the outside investors to abandon their takeover plan assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so vulnerable to cause the outside investors to take control of the company ti. VWV "Uuuuy vui UIVU LUUIUIUIUUIU yuny: These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. Requirement 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. 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 acquire a controlling Purchasing treasury stock . If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently Requirement 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. Sales of treasury stock at prices above the purchase price company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so the sale of treasury stock also stockholde decrease These sales of treasury stock net income b s dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. do not affect increase Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently Requirement 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. company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so Sales of treasury stock at prices above the purchase price the sale of treasury stock also stockholders' equity. These sales of treasury stock ne because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. decreases does not affect increases Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently Requirement 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. company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so Sales of treasury stock at prices above the purchase price the sale of treasury stock also stockholders' equity. These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. will affect will not affect Requirement 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. 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 acquire a controlling Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the Creston investor group, interest (50+ percent) 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 make the company sufficiently Requirement 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. company assets because of the greater amount of assets coming in from the sale than went out to buy the stock. Treasury stock transactions liabilities, so Sales of treasury stock at prices above the purchase price the sale of treasury stock also stockholders' equity. These sales of treasury stock net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. cannot generate a profit or a loss can generate a profit or a loss