LBO Transactions Evaluation Quiz

Free cash flow yield

Operating profit margin (correct)

Net income

Debt-to-equity ratio

To comply with a legal requirement for maximum equity financing

To ensure full financing by the financial sponsor

To decrease financial risk for the target company (correct)

To decrease returns for the financial sponsors

To decrease their overall risk exposure

To maximize tax benefits from the transaction

To compensate for the illiquidity and riskiness of such investments (correct)

To match the industry average returns

<p>Return relative to the initial equity investment</p> Signup and view all the answers

<p>Stable and predictable cash flows</p> Signup and view all the answers

<p>To increase returns for the financial sponsors</p> Signup and view all the answers