Which of the Following Statements Is NOT True

question 48

Multiple Choice

Which of the following statements is NOT true?

• A) Private equity firms pool money from wealthy investors, pension funds, insurance companies, and other sources to make investments.
• B) Private equity firms invest in more mature companies.
• C) Agency problems tend to be more in firms owned by private equity investors than in public firms.
• D) Private equity investors focus on firms that have stable cash flows because they use a lot of debt to finance their acquisitions.

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Definitions:

Working Capital Investment

The funding required to cover the operation's day-to-day financial activities.

Salvage Value

The estimated remaining valuation of an asset at the close of its usability period.

Discount Rate

The rate utilized in DCF analysis for estimating the present value of future cash flows.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available for running day-to-day operations.