Financial distress means a condition of a firm when it is not in a position to meet or meet with difficulty its commitment to creditors or lenders. If financial distress cannot be relieved in time, it can lead to bankruptcy. Firms that become financially distressed are found to be under- performing relative to the other companies in their industry. Financial distress is rooted in the management defects, resulting in poor decisions, leading to financial deterioration and finally collapse.

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