y 1Financial Difficulties: BankruptcyFinancial difficulties leading to bankruptcy are very common for businesses in today's economy. According to CNN Money Fortune 500, “Last year marked the highest number of billion-dollar bankruptcies ever recorded. And business bankruptcies have continued at a high rate, with about double the number of companies filing for bankruptcy protection in the 12 months ending June 2010, compared to the same time period in 2008 , 2007 or 2006. (Roane, 2010) It is very important for every financial manager to recognize that failure can be a reality for any business and that financial managers need to know how prevent it. Almost all businesses have debt, and these debts are used for leverage, but they need to be carefully monitored by the money manager. Many monthly debts that businesses face involve making monthly payments to suppliers and paying employees. It is the financial managers who manage and monitor these debts, so that the debts do not exceed the equity. (Ross, Westerfield, & Jordan, 2010) Companies will be considered to be in financial distress when all of their cash must be used to pay off outstanding debt. Businesses may file for bankruptcy to address and manage the lack of liquidity. When a company files for bankruptcy, the company is protected and bondholders or creditors cannot sue them for money owed. According to the authors of Fundamentals of Corporate Finance, “In principle, a company fails when the value of its assets is equal to the value of its debt.” (Ross......middle of card......is trying to compete with Wal-Mart and Target on similar brands and prices, which has become detrimental to Kmart. (CNN Money.com, 2002) According to CNNMoney.com's Kmart statement included "Kmart, which has about $37 billion in annual revenue, said it has secured $2 billion in debtor financing to repay its $1.6 billion debt and expect to emerge from bankruptcy in about a year (2002). Kmart wanted to come out of the restructuring with a new image that was totally different from that of their competitors and by declaring bankruptcy and reorganizing their organizations they were able to do so. Conclusion: so that a company can prevent any kind of failure , will need to keep its assets below its debt..

Topic > y 1Financial Difficulties: BankruptcyFinancial difficulties leading to bankruptcy are very common for businesses in today's economy. According to CNN Money Fortune 500, “Last year marked the highest number of billion-dollar bankruptcies ever recorded. And business bankruptcies have continued at a high rate, with about double the number of companies filing for bankruptcy protection in the 12 months ending June 2010, compared to the same time period in 2008 , 2007 or 2006. (Roane, 2010) It is very important for every financial manager to recognize that failure can be a reality for any business and that financial managers need to know how prevent it. Almost all businesses have debt, and these debts are used for leverage, but they need to be carefully monitored by the money manager. Many monthly debts that businesses face involve making monthly payments to suppliers and paying employees. It is the financial managers who manage and monitor these debts, so that the debts do not exceed the equity. (Ross, Westerfield, & Jordan, 2010) Companies will be considered to be in financial distress when all of their cash must be used to pay off outstanding debt. Businesses may file for bankruptcy to address and manage the lack of liquidity. When a company files for bankruptcy, the company is protected and bondholders or creditors cannot sue them for money owed. According to the authors of Fundamentals of Corporate Finance, “In principle, a company fails when the value of its assets is equal to the value of its debt.” (Ross......middle of card......is trying to compete with Wal-Mart and Target on similar brands and prices, which has become detrimental to Kmart. (CNN Money.com, 2002) According to CNNMoney.com's Kmart statement included "Kmart, which has about $37 billion in annual revenue, said it has secured $2 billion in debtor financing to repay its $1.6 billion debt and expect to emerge from bankruptcy in about a year (2002). Kmart wanted to come out of the restructuring with a new image that was totally different from that of their competitors and by declaring bankruptcy and reorganizing their organizations they were able to do so. Conclusion: so that a company can prevent any kind of failure , will need to keep its assets below its debt..