When the value of a firm's assets exactly equals the value of its debt, the firm:
A) Is economically bankrupt.
B) Is technically insolvent.
C) Is legally bankrupt.
D) Is in liquidation.
E) Is in default.

Question

Quizplus · Accepted Answer

When the value of a firm's assets exactly equals the value of its debt, the firm is considered economically bankrupt because it has no net worth or equity value for its shareholders.

When the Value of a Firm's Assets Exactly Equals the Value