In addition, he said Kmart expects to complete a refinancing in coming months that will resolve worries over the company's long-term ability to pay bills. Thus, existing models of the firm should have the interests of stakeholders taken into account to make these models more in line with reality.
Unhappy suppliers are an indirect cost to the firm.
These costs can potentially include suppliers not willing to provide adequate inventory or new lines of products for fear that the company might go under and thus would not be paid. In addition, financial distress is a distraction to managers in trying to alleviate the fears of stakeholders. Employee moral might suffer too. An illustration of costs associated with financial distress. As the explanation above demonstrates the company does not have too be in bankruptcy proceedings to incur such costs.