(Question)
A company decides to sell its interest in a joint venture. This is the fifth divestiture in the last five years. Which of the following statements is least likely accurate regarding this sale? The divestiture:
A. may be signaling a poor operating choice and prior bad acquisitions.
B. could be used to manage earnings by lowering the company's overall debt level.
C. is sending a positive signal that management is able to sell assets at a good price.
Answer: C
Divestiture should be a rare event. A divestiture usually send a negative signal. It is unlikely that investors want management to sell profitable assets.
Saturday, February 19, 2011
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment