Some Research Has Shown That Being in Financial Distress May

question 20

Multiple Choice

Some research has shown that being in financial distress may not be all bad news for an entity because:

• A) Investors will see this as an opportunity to buy into a company that can really only improve.
• B) Existing managers will want to be released from their contracts allowing new ideas to be employed.
• C) There will be no requirement to consider the social costs of retrenching employees because the accounting numbers show it is necessary.
• D) It will provide the stimulus to rethink activities that may in turn lead to improved future performance.
• E) All of the given answers.

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Definitions:

Electrolyte

A substance that produces an electrically conducting solution when dissolved in a polar solvent, such as water, essential for the operation of batteries.

Armature

In electrical engineering, the rotating coil or coils of a dynamo or electric motor.

Brushes

Components made of conductive material that transmit electrical current between stationary wires and moving parts, often found in motors and generators.

Commutator

A rotary electrical switch in certain types of electric motors and generators that periodically reverses the direction of current flow through the rotor.