Question

Which of the following is the least likely symptom of a bust out?

a) company's only listed address is a post office box
b) dramatic increase in size of credit orders
c) public notice of change in mgt
d)sudden decrease in inventory

Answer 1

The least likely symptom of a bust out is a public notice of change in management. The other symptoms listed - a company's only listed address being a post office box, a dramatic increase in the size of credit orders, and a sudden decrease in inventory - are all indicative of a bust out. option c

Step-by-step explanation:

The least likely symptom of a bust out is c) public notice of change in mgt.

A bust out refers to a fraudulent scheme where a company intentionally causes its own financial collapse in order to cheat creditors. The other symptoms listed - a), b), and d) - are all indicative of a bust out.

For example, if a company's only listed address is a post office box (a), it may be a sign that the company is trying to avoid accountability or investigation. A dramatic increase in the size of credit orders (b) may indicate that the company is attempting to acquire as much value as possible before going bankrupt. Finally, a sudden decrease in inventory (d) could suggest that the company is liquidating its assets to generate cash quickly.