Question

Which of the following statements are correct?I. Liquidation value of a firm is equal to the present worth of expected future cash flows from operating activities.II. When an acquiring firm purchases a target firm's equity, the acquirer must assume the target's liabilities.III. The market value of a public company reflects the worth of the business to minority investors.IV. The fair market value of a business is usually the lower of its liquidation value and its going-concern value.

Answer 1

Answer: II and III

Explanation:

Out of the given option, the following statements are correct:

II. When an acquiring firm purchases a target firm's equity, the acquirer must assume the target's liabilities.

Reason: While acquiring it's important to consider and ponder upon both assets and liabilities of an individual.

III. The market value of a public company reflects the worth of the business to minority investors.

Reason: The value of the organization plays a vital role in several aspects of market and the players inverting in it.