F3 Exam Dumps : Financial Strategy

Company A plans to acquire Company B.

Both firms operate as wholesalers in the fashion industry, supplying a wide range of ladies' clothing shops.

Company A sources mainly from the UK, Company B imports most of its supplies from low-income overseas countries.

Significant synergies are expected in management costs and warehousing, and in economies of bulk purchasing.

Which of the following is likely to be the single most important issue facing Company A in post-merger integration?

A listed company is planning a share repurchase. 

The following data applies:

   • There are 10 million shares in issue

   • The  share repurchase will involve buying back 20% of the shares at a price of $0.75

   • The company is holding $2 million cash

   • Earnings for the current year ended are $2 million

The Directors are concerned about the impact that this repurchase programme will have on the company's cash balance and current year earnings per share (EPS) ratio.

Advise the directors which of the following statements is correct?

A company is considering either directly exporting its product to customers in a foreign country or setting up a subsidiary in the foreign country to manufacture and supply customers in that country.

Details of each alternative method of supplying the foreign market are as follows:

There is an import tax on product entering the foreign country of 10% of sales value.

This import duty is a tax-allowable deduction in the company's domestic country.

The exchange rate is A$1.00 = B$1.10

Which alternative yields the highest total profit after taxation?