Analysis of the major events that led to the liquidation of firms

This report analyzes the major events that led to the liquidation of firms such as HIH Insurance, One-Tel, and ABC Learning. The analysis reveals that the collapses were attributed to a combination of factors, including poor corporate governance, aggressive expansion, and unethical practices. Specifically, the report highlights unsustainable business strategies, inadequate auditing practices, excessive management compensations, weak working capital management, and questionable related transactions as key contributors. The primary event leading to liquidation was aggressive expansion, resulting in increased debt and liabilities. The report emphasizes the importance of robust corporate governance for effective financial management, preventing situations where liabilities exceed the ability to generate returns.

The report is about analysis of the major events which led to these firms being liquidated.
Based on the analysis of the three scenarios, it can be stated 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, it can be noted that 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 spite of these
aspects, their failure can also be related to their enthusiasm of pursuing low yielding practices
and not saving adequate amount of cash in covering their liabilities. In essence, it can also be
reported that 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. This means that proper corporate governance is crucial in any
organization in facilitating good financial management and practices to avoid any event
where liabilities become more than the amount of return being generated.