Analysis and Control of Bankruptcy and Reorganization Processes: Case Studies Using Accounting Data (original) (raw)
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Bankruptcy – Effects on Business Environment
Annals of the University of Petrosani Economics, 2013
Assuming that insolvency is an economic reality that cannot be ignored especially in the current context, and the concerns in the regulation of a flexible and efficient procedures are numerous both nationally and in the European Union, we have structured the work in two parts, respectively the first part, in which are presented the theoretical aspects of the implementation of the insolvency, more precisely the reorganization and bankruptcy proceedings and the second part, where we made a brief analysis of insolvent companies between 2010-2012. The paper ends with a brief presentation of the insolvency process in Eastern and Central European countries compared to Romania.
diaGnoSticS of banKruPtcy tHreat to enterPriSeS
The prepared diagnostics of bankruptcy threatening to the enterprises is submitted in the present thesis. Herein, bankruptcy threatening to the enterprises is being diagnosed as per three stages, i.e. the condition of the enterprise and the reasons, which have determined such condition, are being gradually concretized. The financial condition of the enterprises and the threat of bankruptcy are being evaluated at the first stage by applying the integrated model, which assists in achieving the generalized evaluation of the condition. The relative financial indices of the enterprise are being analyzed at the second stage seeking for diagnosing the problematic fields of the enterprise. The third stage, at which the absolute financial indices are being analyzed, is aimed at ascertaining the reasons, which have determined the condition of the enterprise. The size of the crisis, its activity factors are ascertained considering evaluation indices of the enterprise condition; they allow selecting substantially the bankruptcy prevention measures out of the possible leading set of internal and external measures.
2011
In global economy as well as in the Romanian economy, labeled as competitive, the risk is there that the existence and viability of a business’ present and future resu lts might be put under the threat of unpredictable events. Assessing and evaluating the financial state of health of a company through a financial-accounting diagnosis requires assessing the risks g oing along with the company activity, some of which may point out its fragility or vulnerability, and others may prefigure bankruptcy or insolvency that may threat its survival and continuity. The target of analysing the entity’s economic activity is to check out and demonstrate that the level of the operational risk is determined by costs achieved and their structure, fixed and variable. Financial risk is analysed as profit sensibility, the risk level being determined by financial costs.
Entrepreneurship and Sustainability Issues, 2018
Bankruptcy of enterprises is macroeconomic issue and a phenomenon of a dynamic and competitive market economy. It results in a lot of negative effects not only for the enterprise and its employees but also for other enterprises and institutions, as well as the state and society. The aim of the article is to carry out the analysis of bankruptcy of Latvian and Lithuanian enterprises. No such study has been carried out so far. Article analyses the dynamics of Latvian and Lithuanian enterprise bankruptcy, which manifest themselves in larger waves in certain periods and the factors that influence them. From 1993when the bankruptcy of enterprises was started to be officially registeredto 1 January 2017, 21,503 Latvian enterprises and 20,933 Lithuanian enterprises went bankrupt. The largest wave of bankruptcy took place in the period of 2008-2010, when the financial crisis started in both countries. The comparative analysis of Latvian and Lithuanian enterprise bankruptcies was carried out according to the economic activity types and enterprises legal forms. In both countries mostly wholesale and retail trade, repair of motor vehicles and motorcycles enterprises (30% on average) go bankrupt, while construction enterprises (13% on average) are the runners-up. Initiators of enterprise bankruptcy are studied, numbers of Latvian and Lithuanian enterprises that went bankrupt are compared to the overall number of companies in the country. The data of this analysis are valuable when forecasting enterprise bankruptcy and preparing the measures to avoid it. The main research methods: analysis of scientific literature and statistical data, case analysis, methods of collection, grouping, comparison and generalization of information.
Importance of Financial Aspects of a Company Crisis Management in Slovakia
Canadian Institute for Knowledge Development (CIKD)
The first part of the article deals with a company decline as a consequence of the insufficient company performance in connection with its financial instability. We focus on a new legal definition of a company decline and an imminent company decline in Slovakia as well. In enterprises, a decline is resolved by the implementation of a company crisis management by using informal and formal procedures of a company crisis management. Next, we devote to financial aspects of company crisis management in connection with financial management. In the second part, we explain the methodology of work and the used methods of the research within a chosen sample of enterprises. The application part of the article includes the statistics of the testing of declines in a chosen sample of enterprises, where we use the financial analysis as a method of indicating a decline in the sample of enterprises. We test especially the golden balance rule of financing with liquidity and debt ratios as the main financial indicators of a company decline. In the work results and within the discussion we come to the characteristics of a company decline causes and the conclusion is aimed at the recommendations for the economic practice in the field of financial company health with the primary objective to avoid or to avert a company decline with the smallest possible losses.
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The paper develops a mechanism for preventing bankruptcy of enterprises at the regional level, which allows management to make managerial decisions on time that will effectively assess the threat of bankruptcy and anticipate it in advance. The developed research mechanism includes 3 main stages: formation of the feature space; enterprise`s bankruptcy probability assessment; forecasting the state of the enterprise. One proved that every year most Ukrainian enterprises have insignificant incomes and receive huge losses, as a result an unemployment is growing in the country. Quarantine restrictions related to the COVID–19 pandemics have made a significant negative contribution to the activities of both domestic and foreign enterprises. The object of the study was an international tobacco company whose activities goes in the Kharkiv region. Thus, the analysis of the financial condition showed that the enterprise investigated is not yet in danger of bankruptcy, since it is in a stable fi...
Academy of Accounting and Financial Studies Journal , 2019
Nowadays, some companies have become an essential element of high importance, not only for the growth of a society, but also for the country. If the companies face difficulties, such as situations of failure, they would take to an economic uncertainty in their influence area. This investigation is aimed to identify the financial characteristics of the liquidated companies in Ecuador, which correspond to Wholesale and Retail Trade. This study was made using a database that was elaborated from the published information by the Superintendence of Companies, Values and Insurances of Ecuador. Companies are classified in two groups: healthy and bankrupt. Afterwards, financial ratios are analyzed according to financial statements during the years 2016 and 2017. Finally, in the results, it can be observed that the healthy companies maintained a lower liquidity level in comparison with the ones that went bankrupt. However, the healthy companies have been able to manage, in an efficient way, their cash allowing them to fund their commercial processes, and thus, to keep themselves afloat in the market. The healthy companies present an average liquidity of 2.66 and an average yield of the total active and patrimony of 3.71% and 11.82% respectively. The bankrupt companies showed a liquidity of 3.84 and an average yield of the total active and patrimony of 1.22% and 5.80%. A difference in the yield is also observed; the bankrupt companies presented a 2.59%, whereas the healthy ones reached a 31.15%. Therefore, even the bankrupt companies presented higher levels of liquidity; their profitability is inferior compared to the healthy ones.
This article shows the results of multi-dimensional studies on enterprises subject to bankruptcy in 2013. Th is article discusses the structure of entities on the basis of the following criteria: legal and organizational form, ownership form, and the main profi le of business activities indicating the industrial belonging of bankrupt and insolvent debtors. Th e studies were also oriented towards the evaluation of the analysed phenomenon on a regional basis, i.e. in the administrative ivision of Poland. The author evaluating the level of concentration of bankruptcy processes, particularly in provinces of Poland, applied the LQ coeffi cient used in economic geography to study the intensifi cation level of selected spacious phenomena.
Improving the Financial Situation of Companies During Suspension of Bankruptcy Process
International Journal of Social Humanities Sciences Research (JSHSR), 2015
Suspension of bankruptcy is a process regulated by Turkish Code of Commerce (TCC) (Article 324) and Bankruptcy and Enforcement Law (BEL) (Article 179), which enables deeply indebted corporations and cooperatives to finalize this period positively. In order for a company to request suspension of bankruptcy, it should be deeply indebted and the improvement project presented to the court for restoring the financial situation should be robust and credible. In this study, the concept of suspension of bankruptcy, legal nature, namely the place of suspension of bankruptcy in the regulations (in TCC and BEL) are presented, and information on material conditions in order to be able to request of suspension of bankruptcy is given. The companies which should request suspension of bankruptcy are emphasized in detail, and finally, information about the improvement project for the financial situation of companies is presented.
The Problem of Bankruptcy in Listed Companies
EUROPEAN RESEARCH STUDIES JOURNAL, 2020
The paper presents an investigation of the bankruptcy of companies listed on the Warsaw Stock Exchange using the Fundamental Power Index in dynamic terms (FPI). Design/Methodology/Approach: The methodology of the Fundamental Power Index (FPI) was used to assess bankruptcy. In general, the essence of the indicator is a synthetic assessment of the company's fundamental strength. The indicator can take high and low values. The appearance of low levels of the ratio for the company is not favourable and indicates a problem in the financial standing area. As a consequence, the level of the ratio may signal a risk of bankruptcy. The article also discusses the legal grounds for bankruptcy of companies in Poland and selected EU countries. Findings: The results of the conducted research indicate that FPI may be a useful tool of early warning against bankruptcy. The dynamic approach to the index allowed for the assessment of the fundamental strength of the companies in the period of five years. At the same time, the level of the index indicated the risk of bankruptcy. The basis for the construction of the ratio was the financial data from the financial statements of the examined entities. In particular, information on financial ratios from the following groups was used: liquidity, profitability, debt and operational efficiency. Practical Implications: The implementation of the indicator concerns many areas, including investing, assessment of companies or the stock market. In the event of bankruptcy, information about the level of the ratio may support the management process of the company and early response of managers to avoid bankruptcy (e.g. by introducing recovery or restructuring programs). For the investor, the information about the low level of the ratio is a signal for actions related to risk management. Originality/Value: The results of the study reflect the applicability and effectiveness of the proposed indicator. Consequently, the fundamental strength index may constitute an alternative to the existing methods of assessing the bankruptcy process in enterprises.