Which of the following is NOT a potential benefit of a merger?
A) An improved financing posture
B) A portfolio effect
C) Dilution of earnings per share
D) A tax loss carryforward

Question

Quizplus · Accepted Answer

Dilution of earnings per share is not a potential benefit of a merger. It is the opposite and is considered a potential disadvantage as it can result in a decrease in earnings per share due to the increased number of shares outstanding after the merger. The other options are potential benefits of a merger. An improved financing posture refers to the merged entity being better positioned to obtain financing due to increased size and financial strength. A portfolio effect refers to the diversification of the merged entity's product or service offerings, which can lead to reduced risk, increased competitiveness, and enhanced revenue streams. A tax loss carryforward refers to the ability to use past losses to offset future tax liabilities and can be beneficial in reducing taxes paid by the merged entity.

Which of the Following Is NOT a Potential Benefit of a Merger