A disadvantage associated with the use of leveraged buyouts is ________.
A) a high collection period
B) low asset turnover
C) the high debt-to-assets ratio
D) low return on net assets

Question

Quizplus · Accepted Answer

The high debt-to-assets ratio is a disadvantage associated with the use of leveraged buyouts. Leveraged buyouts involve acquiring a company primarily with debt, which can lead to a high debt-to-assets ratio. This increases the risk of default and bankruptcy if the company is unable to generate sufficient cash flow to service the debt.

A Disadvantage Associated with the Use of Leveraged Buyouts Is