Which of the following statement(s) about financial distress is(are) true:
I. always ends in bankruptcy
II. firms can postpone bankruptcy for many years
III. ultimately the firm may recover and avoid bankruptcy altogether
A) I only
B) II only
C) II and III only
D) III only

Question

Quizplus · Accepted Answer

Financial distress does not always end in bankruptcy as there are various ways a firm can postpone bankruptcy for many years such as restructuring, selling assets, or raising capital. Ultimately, the firm may also recover and avoid bankruptcy altogether.

Which of the Following Statement(s) About Financial Distress Is(are) True