Financial failure of a firm may be assessed when

Question

Quizplus · Accepted Answer

Financial failure of a firm occurs when the liabilities of the firm exceed the market value of its assets. This is because when the value of the assets is lower than the amount owed, the firm is not generating enough revenue to cover its expenses, which could lead to default on the firm's outstanding obligations. Choice B is not considered financial failure as the firm has a positive net worth and can still pay its bills, and therefore, has not failed.

Financial Failure of a Firm May Be Assessed When