Fraud and Financial Malpractice as A Leading Factor in Business Failure

Fraud and Financial Malpractice as A Leading Factor in Business Failure

DEFINITION OF DISTRESS/FAILURE OF A CORPORATION

Failure of a corporation can be viewed from many perspectives, according to Frcar (1990) Economic failure of a corporation refers to a situation where a firm’s net rate of return on investment, adjusted for risk is significantly lower than the prevailing rate of interest while legal failure refers to a period or situation when the assets of the company are not sufficiency to meet the legally enforcement claims of its creditors. Technical insolvency on its own describes a situation in which a firm finds itself such that it is unable to meet its current obligations even though its total while bank raptly in an equity sense refers to a state where a firm’s total liabilities has outstrip its total assets” [Read more…]