ACCAspace
Provided by
ACCA Research Institute
ACCA P4
Advanced Financial Management (AFM)
高级财务管理
ACCA Lecturer: Lily Wang
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com
, P4 Chapter 10 Content
1 Financial distress and corporate failure
2 The five core causes of financial distress
3 Ratio analysis
4 EVA
5 Assessing he risk of corporate failure
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 2
, Chapter Summary
Corporate reconstruction
and reorganisation
Financial Reconstruction Reorganisation
Strategic failure • Appropriate situations • Demergers
• Causes • Impact on suppliers of • MBOs
• Predicting failure capital
• Responses • Development of schemes
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 3
, 1.Financial distress and corporate failure
What is corporate failure?
• Corporate failure occurs when a company cannot achieve a
satisfactory return on capital over the longer term. If unchecked, the
situation is likely to lead to an inability of the company to pay its
obligations as they become due.
• If a company is in financial distress, corporate failure will follow unless
the company's problems can be identified and corrected
• Therefore, it is important that we can recgnise the main causes of
financial distress.
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 4
Provided by
ACCA Research Institute
ACCA P4
Advanced Financial Management (AFM)
高级财务管理
ACCA Lecturer: Lily Wang
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com
, P4 Chapter 10 Content
1 Financial distress and corporate failure
2 The five core causes of financial distress
3 Ratio analysis
4 EVA
5 Assessing he risk of corporate failure
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 2
, Chapter Summary
Corporate reconstruction
and reorganisation
Financial Reconstruction Reorganisation
Strategic failure • Appropriate situations • Demergers
• Causes • Impact on suppliers of • MBOs
• Predicting failure capital
• Responses • Development of schemes
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 3
, 1.Financial distress and corporate failure
What is corporate failure?
• Corporate failure occurs when a company cannot achieve a
satisfactory return on capital over the longer term. If unchecked, the
situation is likely to lead to an inability of the company to pay its
obligations as they become due.
• If a company is in financial distress, corporate failure will follow unless
the company's problems can be identified and corrected
• Therefore, it is important that we can recgnise the main causes of
financial distress.
ACCAspace 中国ACCA特许公认会计师教育平台 Copyright © ACCAspace.com 4
