Which financial component is NOT considered when assessing the impact of an acquisition?

• A. Foregone interest on cash
• B. Potential for market competition increase
• C. Additional shares outstanding
• D. Creation of goodwill and intangibles

Answer: (B)

When analyzing the impact of an acquisition, it's crucial to consider various financial aspects that directly affect the company's valuation and overall financial health. The potential for market competition increase does not affect the financial metrics in the same direct manner as the other listed components.

Foregone interest on cash considers the opportunity cost associated with using cash to finance the acquisition, which could otherwise earn interest. Additional shares outstanding can dilute existing shareholders' equity and affect earnings per share calculations, making it a significant financial consideration. The creation of goodwill and intangibles factors into the acquisition accounting, as these elements can significantly impact the balance sheet and future earnings if not accurately assessed.

Market competition increases generally relate to strategic positioning and future operational impacts rather than immediate financial metrics. This aspect might influence the revenue potential or market share post-acquisition but does not have a direct financial calculation tied to the transaction itself. Therefore, it stands out as a component that is not considered in the same financial context as the others.