If a buyer expects that the target firm's revenue has been overstated,the buyer can reconstruct revenue by examining usage levels of the key inputs required to produce the product or service.

Question

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Yes, if a buyer suspects that the revenue of the target firm has been overstated, they can reconstruct the revenue by examining the usage levels of key inputs required to produce the product or service. This is because the usage levels of raw materials, labor, and other inputs can provide a more accurate measure of the revenue generated by the target firm. If the usage levels do not correspond with the reported revenue, it may indicate that the revenue has been manipulated.

If a Buyer Expects That the Target Firm's Revenue Has