Accounting Financial ACC701 - Assignment

Added on - 19 Nov 2019

  • 11

    Pages

  • 2898

    Words

  • 217

    Views

  • 0

    Downloads

Trusted by +2 million users,
1000+ happy students everyday
Showing pages 1 to 4 of 11 pages
Trimester 2, 2017 Accounting FinancialACC701
EXECUTIVE SUMMARYThe factors that lead to the failure of the corporate sector in Australia were examinedand studied in the present study by considering case studies of nonfinancial companies of thepublic sector. The study revealed the fact that the success or failure of corporate sectordepends on the structural level characteristics of the company. Public companies have greatercontrol, and there is a separation of ownership, so managers are allowed to take risks, sochances of failure of public companies are more than the private companies. In some of theoverseas research, it was found that the cyclical specific factors of the company like lowliquidity, high leverage or low profitability also contribute to the failure of a corporation. Thekey determinants of risk of failure of a company are the structural and cyclical levelcharacteristics.
TABLE OF CONTENTSIntroduction................................................................................................................................4Liquidation of companies in Australia.......................................................................................4Case examples of liquidation.....................................................................................................4ABC Learning........................................................................................................................4HIH Insurance........................................................................................................................5One.TelPhone Company........................................................................................................6Conclusion..................................................................................................................................7References..................................................................................................................................8
INTRODUCTIONThe present study is based on case evaluation of companies who went into liquidationand had impacted Australian economy significantly. The study will include a description ofliquidation of companies and primary factors that led corporate entities to this situation.Analysis and evaluation in the study will be supported by case examples of ABC Learning,HIH Insurance and One.Telphone Company. It will also include lessons that learnt bycompanies operating in Australia from this major collapses.LIQUIDATION OF COMPANIES IN AUSTRALIALiquidation or winding up is process undertaken legally for the closure of alloperating activities of the business. It involves selling all asset of the business and winding upthe affairs of the company as stated by the law(Hodne and et, al 2013). The process ofliquidation undertaken by law brings the end of a company as it is a lawfully created entitywhich cannot die a natural death.In accordance with the case study ofCarnegie and O’Connell(2014) economicdownturn leads to corporate failure, even though there are controlled changes in specificcharacteristics of the company. The information that is necessary to rank companiesaccording to failure risk is provided in company specific factors. Debt – at –risk frame workmeasures the contribution of failure of cooperation to financial risk stability(Chen, Ramsayand Welsh, 2016). This shows that it is usually concentrated in large companies and corporatedebt at risk is low in total. It also indicated the importance of trade credit, in the leverageform that can have an impact on corporate failure and as a potential channel which promotesshocks. The ability to transmit distress in the business increases its importance towardsfinancial stability.CASE EXAMPLES OF LIQUIDATIONABC LearningThe collapse of ABC Learning is considered to be a crucial case of liquidation inAustralia. As per the view point ofDamiani, Bourne and Foo(2015), the primary reason ofliquidation was the low supervision of the government. Further ABC Company implementedthe trick of the Macquarie Bank of leveraging a consistent streamline of income financially tofinance acquisitions, and expected an always increasing market share price would finance theinfinite growth(Crockett and Ali, 2015). However, they do not contain the sense or the base
desklib-logo
You’re reading a preview
Preview Documents

To View Complete Document

Click the button to download
Subscribe to our plans

Download This Document