financial distress

Definition

Tight cash situation in which a business, household, or individual cannot pay the owed amounts on the due date. If prolonged, this situation can force the owing entity into bankruptcy or forced liquidation. It is compounded by the fact that banks and other financial institutions refuse to lend to those in serious distress. When a firm is under financial distress, the situation frequently sharply reduces its market value, suppliers of goods and services usually insist on COD terms, and large customer may cancel their orders in anticipation of not getting deliveries on time.

Use financial distress in a sentence

We were going through some financial distress and everyone on our team was effected by it and it made things a lot more tense in our company.

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Sadly, the long term effects of financial distress have forced my family to take on extra jobs during the summer rather than vacationing in Florida.

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The president of the United States is pushing for a bill to relieve homeowners who are in financial distress and in danger of defaulting on their mortgages.

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indirect costs of financial distress bond