Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversity its food business and lower its risks. It

image text in transcribed
image text in transcribed
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversity its food business and lower its risks. It is examining three companies-a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Correlation with Standard deviation Treynor Pie Sales Expected Earnings in Earnings Company Company (5 millions) (5 millions) 05 willions Treynor Pie Company + 1.e $ 158 $ 8 $ 2.0 Gourmet restaurant +0.5 66 1.2 Baby food company + 0.4 56 1.9 Nutritional products company - 0.6 79 3.5 a-1. Compute the coefficient of variation for each of the four companies (Enter your answers in millions (e.g.. $100,000 should be entered as "10"). Round your answers to 3 decimal places.) Coefficient of Variation Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company a-2. Which company is the least risky? O Gourmet restaurant O Nutritional products company Treynor Ple Company Baby food company a-3. Which company is the most risky? Treynor Pie Company Baby food company O Nutritional products company O Gourmet restaurant b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Exploring Strategic Change

Authors: Julia Balogun, Veronica Hope Hailey, Stafanie Gustafsson

4th Edition

0273778919, 9780273778912

More Books

Students also viewed these Accounting questions