When Large Firms File for Bankruptcy

question 9

Multiple Choice

When large firms file for bankruptcy:

• A)The proceedings involve costly delays and legal tangles, and the business continues to deteriorate
• B)Their purpose is usually to nurse the firm back to health and enable it to face the world again
• C)Their benefit is that their creditors will be forced by law to give up their claims on the firm
• D)Their creditors often try to seize the assets as soon as possible

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Definitions:

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenues, indicating the company's profitability over a specific period.

Sales

The total amount of money received by a company for goods or services sold during a certain time period.

Margin of Safety Ratio

This ratio measures the difference between actual or expected sales and sales at the break-even point, indicating the buffer against a loss.

Dollar Amount

Refers to the value or cost of something expressed in units of currency.