Financial distress

From Wikipedia, the free encyclopedia

Financial distress is a term in Corporate Finance used to indicate a condition when promises to creditors of a company are broken or honored with difficulty. Sometimes financial distress can lead to bankruptcy. Financial distress is usually associated with some costs to the company and these are known as Costs of Financial Distress. A common example of a cost of financial distress is bankruptcy costs.

When applied to nations, 'Financial distress' is defined as a condition where obligations are not met.

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