Bankruptcy cost view
	• The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt financing.
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	Embedded terms in definition
	Bankruptcy Debt financing Debt Leverage Offset
	Related Terms
	Accelerated cost recovery system Agency cost view All in cost Average cost of capital Bankruptcy Bankruptcy prediction models Bankruptcy risk Bankruptcy view Break even analysis cost volume profit analysis Capital cost allowance Capital market imperfections view Corporate tax view Cost basis Cost benefit ratio Cost company arrangement Cost of a new issue of common stock Cost of capital Cost of carry Cost of common equity Cost of debt Cost of equity Cost of funds Cost of funds index Cost of giving up a cash discount Cost of goods sold Cost of lease financing Cost of limited partner capital Cost of living adjustment Cost of long term debt Cost of new asset Cost of preferred stock Cost of retained earnings Cost yield Dollar cost averaging Equivalent annual cost Fixed cost Incremental cost of a new asset Installation cost Installed cost of new asset Legal bankruptcy Marginal cost of capital Marginal cost of capital schedule Net financing cost Opportunity cost Opportunity cost of capital Pecking order view of capital structure Perfect market view of capital structure Perfect market view of dividend policy Personal tax view of capital structure Prepackaged bankruptcy Product cost Replacement cost Shortage cost Signaling view on dividend policy Taking a view Tax differential view of dividend policy Total cost of inventory Traditional view of dividend policy True interest cost Variable cost Weighted average cost of capital Zero cost collar

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Bankruptcy prediction models >>

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The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts. - Bertrand Russell