MCQ for CA Final SFM - Chapter 9 Mergers, Acquisitions and Corporate Restructuring
Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 2 - Strategic Financial Management - Chapter 9: Mergers, Acquisitions and Corporate Restructuring - For Practice relevant for May/Nov 23 Examinations
Q:1 P Ltd. is considering take-over of R Ltd. by the exchange of four new shares in P Ltd. for every five shares in R Ltd. The relevant financial details of the two companies prior to merger announcement are as follows:
Profit before Tax(₹ crore) |
P Ltd |
R Ltd |
No. of Shares (Crore) |
15 |
13.50 |
P/E Ratio |
25 |
15 |
Corporate Tax Rate 30% |
12 |
9 |
From the above information you are required to determine Market value of both the companies
- 85.05 cr
- 211.05 cr
- 111.25 cr
- 281.05 cr
Answer: 2
Q:2 The following information is provided related to the acquiring Firm Mark Limited and the target Firm Mask Limited:
Firm Mark Limited |
Firm Mark Limited |
|
Earning after tax (₹) |
2,000 lakhs |
400 lakhs |
Number of shares outstanding |
200 lakhs |
100 lakhs |
P/E ratio (times) |
10 |
5 |
What is the Swap Ratio based on current market prices?
- 2 shares of Mark Ltd. for 6 shares of Mask Ltd
- 1 share of Mark Ltd. for 5 shares of Mask Ltd
- 3 shares of Mark Ltd. for 3 shares of Mask Ltd
- 1 share of Mark Ltd. for 8 shares of Mask Ltd
Answer: 2
Q:3 MK Ltd. is considering acquiring NN Ltd. The following information is available:
Company |
Earning after Tax (₹) |
No. of Equity Shares |
Market Value Per Share (₹) |
MK Ltd. |
60,00,000 |
12,00,000 |
200.00 |
NN Ltd. |
18,00,000 |
3,00,000 |
160.00 |
Exchange of equity shares for acquisition is based on current market value as above. There is synergy advantage available.
Find the earning per share for company MK Ltd. after merger
- 5.24 per share
- 4.12 per share
- 5.42 per share
- 4.52 per share
Answer: 3
Q:4 Reliable Industries Ltd. (RIL) is considering a takeover of Sunflower Industries Ltd. (SIL) The particulars of 2 companies are given below:
Particulars |
Reliable Industries Ltd |
Sunflower Industries Ltd. |
Earnings After Tax (EAT) |
₹ 20,00,000 |
₹ 10,00,000 |
Equity shares O/s |
10,00,000 |
10,00,000 |
Earnings per share (EPS) |
2 |
1 |
PE Ratio (Times) |
10 |
5 |
What is the market value of Company RIL before merger?
- 5,00,00,000
- 2,00,00,000
- 1,50,00,000
- 4,00,00,000
Answer: 2
Q:5 Reliable Industries Ltd. (RIL) is considering a takeover of Sunflower Industries Ltd. (SIL). The particulars of 2 companies are given below:
Particulars |
Reliable Industries Ltd |
Sunflower Industries Ltd. |
Earnings After Tax (EAT) |
₹ 20,00,000 |
₹ 10,00,000 |
Equity shares O/s |
10,00,000 |
10,00,000 |
Earnings per share (EPS) |
2 |
1 |
PE Ratio (Times) |
10 |
5 |
Market value of Company SIL before Merger
- 50L
- 30L
- 25L
- 40L
Answer: 1
To get back to the Chapterwise MCQ List Page
Hope you can find this article helpful. If you did like the content then Share it with your friends who are preparing for CA Final Exams or who will be giving their CA Final Exams in the near future.