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CIMA Exam CIMAPRA19-F03-1 Topic 1 Question 94 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 94
Topic #: 1
[All CIMAPRA19-F03-1 Questions]

Company ACC. an ungeared car manufacturer has launched a takeover bid of Company BDD. a key competitor operating in the same industry Company BDD has high gearing Company ACC has a large surplus cash balance and believes that the acquisition is an opportunity to enhance shareholder wealth through the realisation of synergistic benefits. Which THREE of the following would most likely be synergistic benefits to Company ACC of purchasing Company BDD9 I

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Suggested Answer: A, B, E

by Brandon at Aug 26, 2024, 11:19 AM

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Janae
3 months ago
I believe option D is important too, as it can help in reducing financial risk through diversification.
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Bulah
3 months ago
I agree with Erick, option E also makes sense as it can lead to cost savings.
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Cammy
3 months ago
Economies of scale, baby! Now that's what I call a real synergy. Can't wait to see the production costs go down. Maybe they'll even hire a few court jesters to entertain the workers, you know, for morale.
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Frederic
3 months ago
Wait, so they're going to save money on debt by acquiring a highly geared company? That's like trying to get out of debt by taking on more debt. Hmm, I'm not convinced.
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Arleen
3 months ago
B) Decreased cost of debt
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Cassie
3 months ago
A) Reduction in staff costs due to the removal of duplicated roles.
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Rashad
4 months ago
Diversification is always a good thing, right? Reducing financial risk sounds like a solid synergistic benefit to me.
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Natalie
4 months ago
Enhanced profit due to reduced competition is a bit concerning. I hope they don't plan on creating a monopoly or engaging in anti-competitive practices.
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Janae
3 months ago
D) Reduction in financial risk due to diversification.
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Mirta
3 months ago
A) Reduction in staff costs due to the removal of duplicated roles.
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Lisha
3 months ago
I agree, we need to make sure they don't abuse their power.
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Thora
4 months ago
Reduction in staff costs and cost savings in production seem like obvious synergies. But I'm not sure about decreased cost of debt - how does that work exactly?
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Bernadine
2 months ago
Decreased cost of debt can be achieved through lower interest rates and improved credit ratings.
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Wilford
3 months ago
B) Decreased cost of debt
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Delisa
3 months ago
E) Cost savings in production due to economies of scale
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Royal
3 months ago
A) Reduction in staff costs due to the removal of duplicated roles.
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Erick
4 months ago
I think option A is a synergistic benefit because it can help reduce costs.
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