Financial Distress Can Be Best Described by Which of the Following

question 14

Multiple Choice

Financial distress can be best described by which of the following situations in which the firm is forced to take corrective action:

• A) cash payments are delayed to creditors.
• B) the market value of the stock declines by 50%.
• C) the firm's operating cash flow are insufficient to pay current obligations.
• D) cash distributions are eliminated because the board of directors considers the surplus account to be low.

---

Definitions:

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements that helps in adjusting and eliminating the financial information of the parent company and its subsidiaries.

Totals and Subtotals

Sums presented in financial statements or reports that represent the aggregation of financial data, with subtotals used to group related items together under a common category.

Dividends Payable

Refers to the amount of dividend that a company has declared to distribute to its shareholders but has not yet paid out.

Ex-dividend Basis

A stock trading status indicating that the security is sold without the right to receive the next dividend payment.