A bankrupt firm has a negative net worth, meaning its liabilities exceed its assets. This indicates that the firm is insolvent and unable to meet its financial obligations. The other choices are not necessarily true for a bankrupt firm - it may sell its assets to repay creditors, it may struggle to meet obligations, and it may not be able to continue operating.

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A Bankrupt Firm

Question 78

Multiple Choice

A bankrupt firm:

A) has a negative net worth.
B) cannot sell its assets.
C) can meet its obligations as they come due.
D) may continue operating,as if it were solvent.

Correct Answer: