The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as ________ costs.
A)indirect bankruptcy
B)direct bankruptcy
C)financial solvency
D)capital structure
E)flotation

Question

Quizplus · Accepted Answer

Indirect bankruptcy costs refer to the costs associated with avoiding bankruptcy, such as the loss of customers, suppliers, or employees, and the overall impact on the firm's operations and reputation. These costs can be significant and often influence a firm's decision to try to avoid filing for bankruptcy.

The Costs of Avoiding a Bankruptcy Filing by a Financially