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In: Accounting

3. W.T. Grant was the largest retailer in the United States when it caught nearly everyone...

3. W.T. Grant was the largest retailer in the United States when it caught nearly everyone by surprise by filing for bankruptcy in 1975. W. T. Grant had been in existence since the turn of the century and had a long history of profitability including regularly paying dividends from 1906 to 1974. How is it possible that a company can report positive net income and yet be forced to seek bankruptcy protection?

Solutions

Expert Solution

It is possible to any company for making these type of situations in the following cases

1. The management of the company may do window dressing in their books of accounts to get good credibility

2. They use those credinilcre to get loan and grants with those loans and grants they will pay dividend and cover the entire situation what is happening inside of the company

3. But if any bankers or auditors verifies the financial stability correctly then the company has to produce original documents for all requested area then they will confused and all the matter come outside and then they will become bankruptcy

4. In other case there is a lose of huge investment of company example entire financial resources kept in real estate and down in price of land

5.any huge loss in some contracts and company made to pay penalty for that loss

6.any ethical mistake or violations of rules leads to get penalized by heavy amounts if company Connor pay it get bankrupted also

Hence, these are the some cases in the companies may suddenly become bankruptcy

Thank you.

ekkarill92 answered 2 months ago
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