A financially sound firm can become financially distressed as the result of its short-run exposure to financial risk.

Question

Quizplus · Accepted Answer

A financially sound firm can become financially distressed if it is exposed to significant financial risk in the short run, such as sudden changes in interest rates, currency fluctuations, or unexpected financial obligations, which can impact its liquidity and ability to meet short-term obligations.

A Financially Sound Firm Can Become Financially Distressed as the Result