Which one of the following terms applies to the costs incurred by a firm which is trying to avoid filing for bankruptcy?
A) Indirect bankruptcy costs
B) Direct bankruptcy costs
C) Static theory cost
D) Optimal capital structure cost
E) Reorganization costs

Question

Quizplus · Accepted Answer

Indirect bankruptcy costs refer to the costs a firm incurs in an attempt to avoid bankruptcy, such as lost sales, loss of valuable employees, or a decrease in creditworthiness.

Which One of the Following Terms Applies to the Costs