Business combinations are used by firms to externally expand in order to achieve all of the following objectives EXCEPT
A) to increase common stock outstanding.
B) to acquire needed assets.
C) to increase productive capacity.
D) to increase liquidity.

Question

Quizplus · Accepted Answer

Business combinations are used to achieve various objectives, including acquiring needed assets, increasing productive capacity, entering new markets, reducing competition, and gaining access to new technologies or intellectual property. However, increasing common stock outstanding is not a common objective of business combinations. In fact, the issuance of common stock may be a means of financing a business combination, but it is not the ultimate objective of such a transaction. Therefore, option A is incorrect.

Business Combinations Are Used by Firms to Externally Expand in Order