Which One of the Following Is an Example of a Direct

Multiple Choice

Which one of the following is an example of a direct bankruptcy cost?

A) Operating at a debt-equity ratio that is less than the optimal ratio
B) Reducing the dividend payout ratio as a means of increasing a firm's equity
C) Forgoing a positive net present value project to conserve current cash
D) Incurring legal fees for the preparation of bankruptcy filings
E) Losing a key customer due to concerns over a firm's financial viability