Inability of the firm to meet its obligations results in financial distress which may lead to bankru......

Inability of the firm to meet its obligations results in financial distress which may lead to bankruptcy resulting into the following :   (2 marks)

1. Distress sale of assets at lower price.

2. Legal and administrative costs for bankruptcy.

3. Dilution of stakeholders’commitment to the firm.

4. Stretching of payments to suppliers and creditors. The direct costs of such financial distress may be

1 and 2

By: santosh