DANCEST 805 Lecture Notes - Lecture 7: Linear Discriminant Analysis, Business Cycle, Disruptive Innovation
Document Summary
Going concern: selling assets or entire business as going concern no threat of liquidation then: studies suggest: most firms are profitable at point of closure as owners have planned exit. Distress sale: sales is prompted by business making continuing losses which could have led to failure. Insolvency: term used when business cannot pay its debts leads to: 1) personal bankruptcy of sole trader or partnership 2) liquidation of limited company where rest value" of assets goes to creditor. The economy: market & economy are the major influences on closure: 30-50% of sme failures. Luck: finding own bad luck: by deciding to pursue risky course of action. Population ecology: structure of market or industry in which firm operates: highly competitive industry: higher probability of failure second most important after economy. Other opportunities: other opportunities offering attractive income can also persuade to close business currently run.
