One of the Justifications for Leveraged Buyouts in the 1980s

question 59

Multiple Choice

One of the justifications for leveraged buyouts in the 1980s was that they introduced the "discipline of debt." This refers to the fact that

• A) "plowback" is a costly form of raising funds.
• B) interest payments have priority over dividend payments.
• C) double taxation of income raises the attraction of borrowing.
• D) government debt forces firms to borrow more as well.

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Definitions:

Marketing Era

A period marked by the evolution of marketing focus from production to product orientation, and eventually to a marketing orientation that emphasizes understanding and satisfying customer needs.

Production Era

A historical period in business where the focus was primarily on production efficiency and manufacturing output, often at the expense of customer needs.

Consumer Oriented

Refers to a business approach that prioritizes understanding and meeting the specific needs and wants of consumers.

Outsourcing

The business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees.