According to the Grant Department stores bankruptcy 1.Which types of risk were present? List and discuss...

According to the Grant Department stores bankruptcy

1.Which types of risk were present? List and discuss them.

2.What types of ratio calculations and analysis should have taken place to better predict Grant's demise?

3.Which ratios in particular were likely indicators of Grant's impending demise?

Solutions

Expert Solution

1. Risk associated with grant departmental Store bankruptcy was as follows -

A. The company was very old and the company was not able to to adapt to the changing environment

B. cost of operations were getting higher and margins of profits are getting lower

C. It did not eliminate the shareholders dividend in time because it was too stubborn to pay the dividend to their share holder even because the company did not have cash.

2.there should have been better calculation of the liquidity ratios of the company and their should have been better calculation of the solvency ratios of the company in order to estimate free cash flows available to the company and it would also have been meant that the solvency risk of the company could have been properly analysed in order to continue its business

3.cash ratios which were mainly related to the dividend payout where the main problems related to the closure ofof grants departmental Store

jeff jeffy answered 1 year ago

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