Series 79 practice questioneasyAdvanced Financial Analysis
What is the main purpose of conducting an accretion/dilution analysis during a proposed transaction?
- ATo estimate the target's stand-alone valuation
- BTo evaluate the buyer’s credit rating
- CTo assess the impact on acquirer’s EPS✓ Correct answer
- DTo forecast combined company revenue
Explanation
Why C — To assess the impact on acquirer’s EPS
Accretion/dilution analysis measures the effect of a deal on the acquirer’s EPS. Focusing on credit or revenue misses the point of this key analysis.
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