By definition,which of the following costs are included in the term "financial distress costs"?
I.direct bankruptcy costs
II.indirect bankruptcy costs
III.direct costs related to being financially distressed,but not bankrupt
IV.indirect costs related to being financially distressed,but not bankrupt
A)I only
B)III only
C)I and II only
D)III and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Financial distress costs include all types of costs associated with a firm's financial distress, whether it is in bankruptcy or just facing financial difficulties. This encompasses direct bankruptcy costs (like legal and administrative expenses), indirect bankruptcy costs (such as lost sales, customers, and employee morale), and both direct and indirect costs related to being financially distressed but not necessarily bankrupt.

By Definition,which of the Following Costs Are Included in the Term