In a leveraged buyout,the entrepreneur wants to raise as much of the capital needed as possible in the form of long-term debt.This makes it particularly critical for the entrepreneur to assess the firm's
A) debt capacity
B) financial package
C) competitive position in the industry
D) market loss

Question

Quizplus · Accepted Answer

In a leveraged buyout, the entrepreneur seeks to fund as much of the purchase as possible through long-term debt. Therefore, it is crucial for the entrepreneur to assess the debt capacity of the firm, or how much debt the company can handle without jeopardizing its financial stability. This assessment helps ensure that the company can make the required debt payments and meet other financial obligations without causing financial distress. Hence, option A is the correct answer. Options B, C, and D are not directly related to debt capacity and are less relevant to the buyout process.

In a Leveraged Buyout,the Entrepreneur Wants to Raise as Much