Which three of the following are most likely to be costs of financial distress?
A) Uncertainties in customers' minds about dealing with this firm
B) Temptation to fire sell healthy businesses as this will raise the most cash
C) Low staff morale
D) If assets can be sold quickly the price may be very high.

Question

Quizplus · Accepted Answer

A) Uncertainties in customers' minds about dealing with this firm can lead to reduced sales, which can be a cost of financial distress.
B) The temptation to fire sell healthy businesses to raise the most cash may result in the firm disposing of profitable ventures, leading to future loss and therefore a cost of financial distress.
C) Low staff morale can lead to reduced productivity and could cause key employees to leave, creating a cost of financial distress. Option D is not a cost of financial distress as a high selling price for assets being sold quickly is a positive outcome.

Which Three of the Following Are Most Likely to Be