Abstract

ABSTRACT This paper analyzes an acquisition on the basis of a methodology that includes integrated ratios and capitalization techniques. The problem of conflicting results Inherent in analysis with different financial ratios is thereby obviated. Strengths and weaknesses in the acquired company are identified and forecasts of future cash flows are projected; these are based on (i) historical trends alone and (ii) historical trends plus the advantages of affiliation. Standard discounted cash flow procedures are applied to arrive at an investment worth that can be compared with the purchase price.

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