Which three of the following are most likely to influence the risk of financial distress?
A) The proportion of fixed to variable costs
B) The liquidity and marketability of the firm's assets
C) The sensitivity of the company's revenues to the general level of economic activity
D) An improvement in relationships with suppliers

Question

Quizplus · Accepted Answer

The proportion of fixed to variable costs, liquidity and marketability of assets, and sensitivity of revenues to economic activity are all factors that can significantly impact a firm's financial distress risk. An improvement in relationships with suppliers may have some positive impact, but it is less likely to directly affect financial distress risk as compared to the other factors listed.

Which Three of the Following Are Most Likely to Influence