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COSTS OF ALTERNATIVE 1
DOWNSIZING
opportunities to perform
company.
When two firms merge, their debt and equity are also combined, and the
resulting corporation may have a very different debt-to-equity ratio
than either of the original companies. A company with low debt-toequity ratio may target a business with a high ratio as a means of
better balancing it finances. Ideally, merging can provide sufficient
resources to cover up the companys daily dues and can have an
advantage for expansion to further pursue more income generating
businesses.
COSTS OF ALTERNATIVE 2
The greater the number of business
to invest.
its operations.