Krugman Exports, Inc., is located in Clancy, New Mexico. The company does business with specialty 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 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 Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the acquire a controlling interest (50+ percent) of the outstanding stock from the remaining stockholders. Creston investor group, 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 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 V net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement. Krugman Exports, Inc., is located in Clancy, New Mexico. The company does business with specialty 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 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 Purchasing treasury stock If Krugman Exports holds a sufficient quantity of company stock in the treasury, outsiders, such as the acquire a controlling interest (50+ percent) of the outstanding stock from the remaining stockholders. Creston investor group, 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 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 V net income because the company is dealing with its owners. Transactions between the corporation and its owners that is reported on the income statement
