Cash acquisitions of going concerns are best analyzed using
A) ratio analysis.
B) capital budgeting techniques.
C) the weighted marginal cost of capital theory.
D) an investment opportunity schedule.

Question

Quizplus · Accepted Answer

Cash acquisitions of going concerns typically involve significant capital expenditures and require a long-term strategic analysis of potential cash flows and return on investment. Therefore, capital budgeting techniques, including net present value analysis and internal rate of return, are the most appropriate analysis tools in this context. Ratio analysis and the weighted marginal cost of capital theory may also provide useful information but are not as focused on the specific cash flows and investment considerations of a cash acquisition. An investment opportunity schedule is not a commonly used tool for analyzing cash acquisitions.

Cash Acquisitions of Going Concerns Are Best Analyzed Using