Economy of scale benefits is a possible source of cash flow benefits derived from a merger.

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Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale. In the context of a merger, combining two or more companies can lead to larger scale operations, which can result in lower costs per unit due to more efficient use of resources, bulk purchasing, and spreading fixed costs over a larger output, among other factors. These cost savings can directly contribute to improved cash flow for the merged entity.

Economy of Scale Benefits Is a Possible Source of Cash