If a firm experiences a financial loss for the year, the loss is shared equally by the debt holders and equity holders.

Name: If a firm experiences a financial loss for the year, the loss is shared equally by the debt holders and equity holders.
Brand: Quizplus
Rating: 4.9 (30 reviews)

Question

Quizplus · Accepted Answer

Equity holders (shareholders) bear the losses after all debts to creditors (debt holders) have been paid. Debt holders have priority over equity holders in the event of a financial loss.

If a Firm Experiences a Financial Loss for the Year