An attractive candidate for acquisition through a leveraged buyout should ________.
A) possess a relatively high leverage
B) have a solid profit history
C) have a high level of provision for doubtful accounts
D) have a low level of investment in fixed assets

Question

Quizplus · Accepted Answer

An attractive candidate for acquisition through a leveraged buyout should have a solid profit history. This will ensure that the company has a stable and predictable cash flow that can support the debt financing needed for the leveraged buyout. A high leverage or a high level of provision for doubtful accounts may make the company riskier for lenders, and a low level of investment in fixed assets may indicate a lack of growth potential for the company.

An Attractive Candidate for Acquisition Through a Leveraged Buyout Should