Mergers that attempt to bootstrap earnings may obtain increased current earnings per share at the expense of:
A) a higher price-earnings ratio.
B) higher total combined market value.
C) reduced future growth prospects.
D) increased free cash flow.

Question

Quizplus · Accepted Answer

The statement suggests that the merger is attempting to increase current earnings artificially, implying that the combined company's future growth prospects may not be sustainable. Therefore, reduced future growth prospects are likely to be the consequences of such mergers.

Mergers That Attempt to Bootstrap Earnings May Obtain Increased Current