Accounting Financial Australian Firms

Added on -2020-02-24

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Accounting Financial ACC70 1ACCOUNTING FINANCIAL ACC70StudentCourse TitleProfessor’s NameInstitution’s NameDate
Accounting Financial ACC70 2Executive SummaryThis study presents analysis of the major events which led to these firms being liquidated. It will start with background information about the three firms followed by analysis of the events leading to their liquidation and then ethics and governance practices of these firms. Based on the analysis of the three scenarios, it is clear that the collapse of the three firms were mainly attributed by numerous aspect or events ranging from poor or failure in corporate governance, aggressive expansion to unethical practices of the directors and auditors. One overall, the collapse of HIH, One-Tel as well as ABC Learning were attributed by unsustainable business strategies, poor auditing practices, potentially excessive management compensations, weak corporate governance, ineffective working capital management as well as questionable related transactions. In essence, the major event that resulted in liquidation of HIH Insurance, One-Tel as well as ABC Learning is aggressive expansion or excessive liabilities. This is mainly based on the fact that aggressive expansion resulted in increased debt to equity margin or increased liabilities which in turn made the firms risky since their leverage was far much beyond their capability of repaying the loan.
Accounting Financial ACC70 3Table of ContentsExecutive Summary...................................................................................................................2Introduction................................................................................................................................4Background Information of these three firms............................................................................4ABC Learning Collapse.........................................................................................................5HIH Insurance Collapse.........................................................................................................7One-Tel Collapse....................................................................................................................8ABC Learning Ethics and Governance...............................................................................9Ethics and governance practices of One-Tel......................................................................9Ethic and Governance of HIH Insurance..........................................................................10Conclusion and Recommendations..........................................................................................10REFERENCES.........................................................................................................................12
Accounting Financial ACC70 4IntroductionIn the past few years, a number of Australian firms have been liquidated as a result of their failure to settle their liabilities once they turn due. Some of these firms include the ABC Learning, One-Tel as well as HIH Insurance. As a result, this study aims to present analysis of the major events which led to these firms being liquidated. It will start with background information about the three firms followed by analysis of the events leading to their liquidation and then ethics and governance practices of these firms.Background Information of these three firmsABC Learning was the Australian largest childcare provided established in 1988. It was once the largest provider of the early childhood education services across the world. Within its firstoperations, the company ran around 4,700 childcare centres and delivered child-care services to over 110,000 children across New Zealand, UK, Australia and US. It main role was operation of long day care centres across the globe (Rush & Downie 2006). It provided childcare services for children ranging from six weeks to pre-school age. In addition, other centres provided after and before school as well as vacation care. It had four building blocks that were to ensure development of children such as learning curriculum, facilities and environment, centre staff training and development as well as nutrition and physical development (Teen 2012). Evaluated by its market share and turnover, ABC was one of the largest childcare provide in Australia and one of the largest listed provider across the globe. During the year 2005, ABC Learning had total revenue of around $300 million and controlledin between 20%-25% of Australian childcare market. Despite its market size, ABC acquired Learning Care Group in 2005 that operated 460 centres (Khan 2017). After all it successful history back in 2008, the company had its distress of sever financial stress and debt that forced it to go into receivership by November 2008. During this time 40%

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