The debt to capital ratio for most _____ usually exceeds the equity by a factor of 5:1.
A)mergers
B)leveraged buyouts
C)hostile takeovers
D)franchises

Question

Quizplus · Accepted Answer

The debt to capital ratio of leveraged buyouts is usually high as they involve purchasing a company using a significant amount of debt. In such cases, the equity portion of the capital used to acquire the company is relatively small compared to the debt used to fund the purchase. The other options, such as mergers, hostile takeovers, and franchises, may or may not involve significant levels of debt, and their debt to capital ratios may vary depending on the specific circumstances. Hence, option B is the best answer.

The Debt to Capital Ratio for Most _____ Usually Exceeds