Which one of the following is a direct,rather than an indirect,cost of financial distress?
A)Key employee leaving for another job due to concerns over job security given the company's financial status
B)Loss of a key supplier due to late payments to that supplier
C)Fees paid to financial advisors related to bankruptcy matters
D)Loss of customers due to concerns the company will close
E)Money spent to send a mailing to customers dispelling any and all financial distress concerns about the company

Question

Quizplus · Accepted Answer

Fees paid to financial advisors related to bankruptcy matters are a direct cost of financial distress as they are directly related to the process of dealing with the financial distress, such as filing for bankruptcy or seeking debt restructuring. The other options are indirect costs as they are consequences of financial distress but not directly related to the process of dealing with it.

Which One of the Following Is a Direct,rather Than an Indirect,cost