Saddling High Levels of Debt :: essays research papers

Saddling juicy Levels of DebtDuring the 1970s, the managers of Ling-Temco-Vought, Inc. (LTV)manufacturers of oxygenisecraft and aircraft related electronics, borrowed heavily to exploit the advantage of financing operations with debt. At first the airlines were making profits their operating income a lot high than fill expenses. Unfortunately as the crinkle cycle turned, the company was unavailing to continue making profits, reporting losses. Their expenses were a lot higher than their interest income. This burdened the company with a lot of debt, and hence pushed the company to the wand of unsuccessful person.Airline manufacturing is one of the riskiest industries. The major cost of airline industries is bullion spent on research and development. Products of the aerospace industries are very expensive, a lot of gold is spent on researching products that might non sluice leave the draught board, even if the product finally leave the drawing boards, there is no guarante e that they will be bought. Furthermore their products are only bought when the parsimony is doing extremely well. This makes the aerospace manufacturing an extremely risky industry.The luxuries we enjoy today, for instance cheaper and better air travel, would not be here, were it not for high risk taking by the airline-manufacturing administrators. In spite of the afore mentioned points, I still do not speak out that it is ethical for managers of Ling-Temco-Vought, Inc to saddle the company with a lot of debt. Financing business operations with debt, is a common business practice, but having high levels of debt is not good business practice at all. As a moment of high levels of debt agreen by the managers of Ling-Temco-Vought, Inc, race at the lower reverse of the ladder and investors are going to suffer a lot. When the Ling-Temco-Vought, Inc is pushed to the brink of bankruptcy the managers are going try to cut input cost, that means that people with skills that are easily a cquired, will lose their jobs. Also people who invested in the company will lose a lot of money. It is unethical for the managers to take so much risk when they know that the chance of them losing their jobs or creation affected in any form is very low. In conclusion, even though taking a lot of debt means more money is spent on research and development, and hence better products for the consumers in the dogged run (provided that the economy will be stable for a hanker period of time), I do not approve of what the managers of Ling-Temco-Vought, Inc are doing.