Bankruptcy Essay Example | Topics and Well Written Essays - 1000 words

Bankruptcy - Essay ExampleIf Quick ratio, Current ratio and Times Interest take in ratio are negative then this is an indication that the comp both faces liquidity problems and the creditors are not satisfied with the companys financial performance and also the creditors will not issue more debt in future (Tenk).If the companys cash outflows are higher than the cash inflows then this is an alarming situation for the company. It make waters also the indication that there is any mismanagement exists in the companys operating, investing and financial support activities (Tenk).1. Implication on Current Asset Current assets are reviewed critically after the announcement of bankruptcy. All the requisite payments to the creditors are made through sales of those assets. (Main set up of Petitioning for Bankruptcy).2. Implication on Future Assets After bankruptcy, the company loses its money with respect to the payments made to the creditors and the money leave is insufficient in order of magnitude to acquire dorsum the assets, to start running the business again in future. Moreover, time value of money and the factor of inflation also make a significant intuitive feeling on the future assets. (Main personal effects of Petitioning for Bankruptcy).3. ... All the necessary payments to the creditors are made through sales of those assets. (Main Effects of Petitioning for Bankruptcy). 2. Implication on Future Assets After bankruptcy, the company loses its money with respect to the payments made to the creditors and the money left is insufficient in order to acquire back the assets, to start running the business again in future. Moreover, time value of money and the factor of inflation also make a significant impression on the future assets. (Main Effects of Petitioning for Bankruptcy). 3. Implication on Future Credit The element of bankruptcy also brings about a curse for the company as it then faces difficulty in acquiring additional debt for its future business o perations. Because of bankruptcy the companys goodwill and credit ratings are also negatively impacted (Main Effects of Petitioning for Bankruptcy).PROS AND CONS OF BANKRUPTCYThe advantages of bankruptcy are stated belowAfter filing the bankruptcy, the creditors are legally bound to stop all activities of debt collection.Filing for Bankruptcy give sthe company a fresh financial start In most of the bankruptcy cases certain categories of propertys like home, life insurance and car, are exempted in order to repayment of debt to creditor. The disadvantages of bankruptcy are stated belowDeclaration of bankruptcy distorts the image and goodwill of the company.In near future the company faces difficulty financing their expenses by acquiring more debt.Due to the bankruptcy, the companys stock prices fall and there is an implication on ceasing the future business operations.Due to the effect to bankruptcy, the company loses work over its property (Bankruptcy Pros and Cons).In order to sue